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[August 2007]
Ferro Reports 2007 Second Quarter Results
Ferro Corporation (Cleveland, OH, USA) announced sales of US$554 million for the quarter ended 30 June 2007, up 3% from sales of US$538 million in the second quarter of 2006.Income from continuing operations for Q2 2007 was US$4.6 million compared with US$10.5 million in Q2 2006. Income from continuing operations declined primarily as a result of previously announced manufacturing rationalisation, the costs of a temporary plant shutdown and higher selling, general and administrative costs due to litigation settlements. These higher costs were partially offset by lower interest expenses. The 2007 second quarter income from continuing operations included net pre-tax expenses of US$10 million primarily related to a reserve for litigation settlements and manufacturing rationalisation costs. The second quarter 2006 income from continuing operations included net pre-tax expenses of US$3.7 million from expenses primarily related to the write-off of previously unamortised fees and discounts related to the company's debentures and an accounting investigation and restatement.
"We maintained sales in the quarter, as our international business helped compensate for the effects of weak residential construction, appliance and automotive markets in the U.S.," said Chairman, President and CEO James Kirsch. "Our segment income was negatively impacted by an interruption of manufacturing of our South Plainfield, New Jersey plant. However, we have improved the profitability in our Organic Specialties Group, through product repositioning and expense control. We continue to execute our restructuring programs to improve the cost structure to support our worldwide brand, technology and applications understanding."
Sales in the Performance Coatings segment increased in both the tile and porcelain enamel product areas compared with the prior-year quarter. Both the Performance Coatings and Color and Glass Performance Materials segments experienced growth in international sales, particularly in Europe. Sales in Polymer Additives also increased compared with the prior year quarter, with increased sales in both North America and internationally, driven by repositioning sales toward a more favourable price and product mix. Sales in Electronic Materials declined in the quarter, primarily driven by weaker dielectric materials demand from supply chain inventory reductions by customers who manufacture capacitors. Sales in Specialty Plastics declined compared with the second quarter of 2006, largely due to weaker demand in the U.S. residential housing, appliance and automotive markets.
Total segment income for the second quarter of 2007 was US$40.4 million compared with US$42.7 million in the prior-year period. The decline was driven by reduced segment income in the Electronic Material Systems segment as a result of lower volumes of dielectric materials sold and the impact of the temporary interruption of manufacturing at the South Plainfield site. Segment income also declined modestly in Performance Coatings, driven by lower income in the company's porcelain enamel business. Segment income increased in Color and Glass Performance Materials as a result of higher sales. Income also was higher in the Polymer Additives and Specialty Plastics segments primarily as a consequence of expense control initiatives taken during late 2006 and early 2007 in response to weak market conditions.
The company said it expected sales to increase in the third quarter compared with sales of US$501 million in the third quarter of 2006. Consistent with historical seasonality, sales are expected to decline sequentially from the second quarter of 2007. Sales for the third quarter, ending 30 September, are expected to be in the range of US$505 million to US$530 million. Sales in Electronic Material Systems are expected to increase sequentially from the second quarter of 2007 and compared with the prior-year quarter, as demand from manufacturers of capacitors recovers. Sales in Performance Coatings, Color and Glass Performance Materials and Polymer Additives are expected to increase compared with the prior-year period.
www.ferro.com
ENDS