Hexion loss widens on mixed demand, COVID-19 impact (update)

19:11 PM | May 14, 2020 | Vincent Valk

Hexion today reported a first-quarter net loss of $59 million, compared with a $52-million loss in the year-ago quarter. Net sales declined 6.8% year on year (YOY), to $826 million. Reported adjusted segment EBITDA was $89 million, down 14% YOY. The coronavirus disease 2019 (COVID-19) pandemic reduced earnings by $4 million, Hexion says.

“In the first quarter of 2020, our diverse customer base and broad geographic footprint drove improved volumes in our coatings and composites segment, while our overall results were offset by weaker conditions that emerged late in the quarter due to the [COVID-19] pandemic,” says George Knight, acting CEO and CFO of Hexion. “We are seeing a more significant impact in the second quarter of 2020 from the pandemic. Because neither the duration nor scope of the [COVID-19] impact can be predicted, the negative financial impact to our results cannot be reasonably estimated.”

Adhesives segment sales declined 13.8% YOY to $468 million, while segment EBITDA was down 6.6% to $71 million. Coatings and composites segment sales rose 4.4% YOY to $358 million, while segment EBITDA fell 11.4% to $39 million.

Hexion had $440 million in liquidity and about $1.9 billion in total debt as of 31 March. “Hexion expects to have adequate liquidity to fund its ongoing operations for the next 12 months from cash on its balance sheet, cash flows provided by operating activities and amounts available for borrowings under its credit facilities,” the company says.

Knight is standing in for Hexion chairman and CEO Craig Rogerson, who is taking a medical leave of absence due to "a condition consistent with COVID-19."