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Ashland lowers FY23 revenue view to $2.3B-$2.4B from $2.5B-$2.7B
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Ashland lowers FY23 revenue view to $2.3B-$2.4B from $2.5B-$2.7B

Consensus is for FY23 revenue $2.51B. Based on current forecasting, continued customer de-stocking and external uncertainties for the second half of the fiscal year, Ashland commenced actions in April to reduce inventories in certain product lines for impacted end markets. These inventory-control actions are expected to negatively impact Adjusted EBITDA in the second half of the fiscal year by approximately $20M. As a result, the company has updated its financial outlook for FY23. Ashland now expects Adjusted EBITDA to be in the range of $580M-$610M reflecting weaker global end-market demand and the inventory-control actions for specific product lines. "Although results in our Q2 were consistent with expectations, order-pattern dynamics in April indicate that customer de-stocking is continuing," said Guillermo Novo, CEO. "While we expected to gain more clarity on de-stocking and market dynamics during the quarter, weaker-than-expected results over the past month and in certain end markets have created greater uncertainty regarding the de-stocking dynamics. We expect that demand for our pharmaceutical products will remain strong through the second half of the fiscal year. Inventory destocking creates more uncertainty for our Personal Care and Specialty Additives end markets. Ashland’s inventory level was consistent with the level at the close of the December quarter. However, given the risk of continued de-stocking dynamics across the value chain, Ashland is taking action to reduce inventory levels in certain product lines during the Q3. In addition, given current demand uncertainty and with increased concerns of further global economic deceleration and the increasing cost of capital, we remain concerned about the demand outlook. If customer de-stocking persists through the June quarter, we may take additional inventory reduction actions in certain product lines. As such we are adjusting our sales and Adjusted EBITDA outlook ranges for the fiscal year. These changes reflect our current forecast, downside absorption risk and upside market strengthening potential. As I have stated before, this is a time for caution. Despite the challenging environment we remain confident about the future. Our customers remain resilient but are clearly taking actions to reset inventory levels consistent with new global demand expectations. The pricing and mix-improvement actions we have taken position us well to cover current cost inflation as we continue to invest in our future. I look forward to discussing our fiscal-second quarter financial results and outlook during our earnings call and webcast tomorrow morning.".

Published first on TheFly

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