Question-and-Answer Session
Thank you. [Operator Instructions]. Thank you. Our first question is coming from Ghansham Panjabi. Please state your company name and proceed with your question.
Ghansham Panjabi - Wachovia Securities
Hello?
Richard L. Wambold - Chairman and Chief Executive Officer
Hello, Ghansham.
Ghansham Panjabi - Wachovia Securities
Hi, good morning. In the past few years, it seems like cost has been the overwhelming variable in terms of forecasting. Obviously now we have the added uncertainty of a weak end-market as well. So, just two related questions on this. How much of your full year guidance provision is cost versus top line? Is that 80:20, 50:50, something like that? And how does this downturn Richard compare with what you saw back in '01 and '02 on the volume side? Thanks.
Richard L. Wambold - Chairman and Chief Executive Officer
Thanks, Ghansham. I would say the vast majority, as I've said in my prepared remarks of our uncertainty and therefore, our forecast adjustment has to do with the cost side of resin. And, in fact, if you look at what's out there right now, if you'll look at the Chemical Manufactures Association Index, you might very well convince yourself that our full year number from the previous forecast is a reasonable number to give you. When we look at that, and we look at the basis upon which they made that and when they made that in the oil price scenario that they had in that. Our feeling is that, that it did not include $120 of barrels, I don't know if it's going to stay at 120, but that's not the best that I like to make it live, if I like to use the facts, we have in front of us, as opposed to trying to come up with my own oil price guess.
So, it's truly as simple as this. We're using what's currently available to us to assess the remainder of the year and we're basing, the majority of our forecast based on those hard facts which are the ones we really have that we can base it on. Giving you an alternative scenario, the alternative scenario is, a lot of forecasters say, it's a bubble and it will burst, and it will come back down. Clearly and probably ethylene there is a good case for that because of the incremental capacity coming on in the Middle East. In polystyrene there is a case for it. In that the summer driving season, which trends to drive, used target lane [ph] which drives up benzene costs which ultimately are the main feedstock. And polystyrene obviously when that ends it may also come down. If those were to happen, then I think we could perform quite well on the cost side.
- To read the full transcript on Seeking Alpha, click here »
