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Hexion Inc. (MSC) swung to a net loss for the quarter ended Sep. 30, 2016. The company has made a net loss of $47 million in the quarter, against a net profit of $7 million in the last year period.
Revenue during the quarter dropped 23.10 percent to $819 million from $1,065 million in the previous year period. Gross margin for the quarter contracted 62 basis points over the previous year period to 14.41 percent. Total expenses were 94.51 percent of quarterly revenues, up from 93.05 percent for the same period last year. That has resulted in a contraction of 145 basis points in operating margin to 5.49 percent.
Operating income for the quarter was $45 million, compared with $74 million in the previous year period.
"While our total Segment EBITDA declined slightly when adjusted for dispositions, a number of specialty businesses posted strong year-over-year gains, including Versatic Acids™ and Derivatives and our global forest products business, demonstrating the diversity of our differentiated product portfolio," said Craig O. Morrison, chairman, president and chief executive officer.
Operating cash flow turns negative
Hexion Inc. has spent $131 million cash to meet operating activities during the nine month period as against cash inflow of $66 million in the last year period.
Cash flow from investing activities was $223 million for the nine month period as against cash outgo of $114 million in the last year period. It has incurred net capital expenditure of $90 million on net basis during the nine month period, down 25.62 percent or $31 million from year ago period.
The company has spent $195 million cash to carry out financing activities during the nine month period as against cash inflow of $88 million in the last year period.
Cash and cash equivalents stood at $126 million as on Sep. 30, 2016, down 32.62 percent or $61 million from $187 million on Sep. 30, 2015.
Working capital declines
Hexion Inc. has witnessed a decline in the working capital over the last year. It stood at $324 million as at Sep. 30, 2016, down 24.83 percent or $107 million from $431 million on Sep. 30, 2015. Current ratio was at 1.45 as on Sep. 30, 2016, down from 1.56 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 36 days for the quarter from 48 days for the last year period. Days sales outstanding went up to 63 days for the quarter compared with 52 days for the same period last year.
Days inventory outstanding has decreased to 21 days for the quarter compared with 37 days for the previous year period. At the same time, days payable outstanding went up to 48 days for the quarter from 41 for the same period last year.
Debt comes down
Hexion Inc. has recorded a decline in total debt over the last one year. It stood at $3,544 million as on Sep. 30, 2016, down 9.55 percent or $374 million from $3,918 million on Sep. 30, 2015. Total debt was 162.27 percent of total assets as on Sep. 30, 2016, compared with 150.81 percent on Sep. 30, 2015. Interest coverage ratio deteriorated to 0.59 for the quarter from 0.88 for the same period last year.
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