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[August 2006]
OM Group Announces 2006 Second Quarter Results
Net sales for OM Group (Cleveland, OH, USA) for the three months ended 30 June 2006 were US$330.2 million, compared to US$314.7 million reported in the corresponding three-month period of 2005. Operating profit in the second quarter of 2006 was US$58.4 million, 186% higher than the US$20.4 million reported in the second quarter a year ago. Net income increased to US$53.1 million for the second quarter of 2006, up 369% from last year's second quarter net income of US$11.3 million.As reported previously, the primary factors driving the company's marked improvement in its second quarter results include the well-documented rise in base metal prices, particularly nickel; a lower than anticipated effective income tax rate for the quarter due to a higher proportion of the company's income earned in low tax jurisdictions and favourable foreign currency impacts; and higher sales volumes in the company's Specialties segment. In addition, the sale of OM Group's investment in Weda Bay Minerals Inc in the 2006 period resulted in cash proceeds and a gain of US$12.2 million.
In the first quarter of 2006 the company realigned management responsibilities. As a result, the former Cobalt Group has been renamed the Specialties segment. The Electronic Chemicals business unit, formerly a component within the Nickel reportable segment, was realigned into the Specialties reportable segment. The corresponding information for 2005 has been reclassified to conform to the current year reportable segment presentation.
The Specialties segment includes three business units: Advanced Organics, which produces products for the tyre, coatings and inks, additive and chemicals markets; Inorganics, which produces products for the powder metallurgy, battery, ceramic and chemical markets; and Electronic Chemicals, which produces products for the semiconductor finishing, memory disk, general metal finishing and printed circuit board finishing markets.
In Q2/2006, net sales were US$175 million and operating profit was US$32.7 million compared with net sales of US$148.4 million and operating profit of US$10.2 million for Q2/2005. The increase in net sales was due primarily to increased sales volumes, increased copper by-product sales and sales attributable to Plaschem, which was acquired in March 2006. These increases to net sales were partially offset by lower product selling prices caused by the decrease in cobalt reference prices in Q2/2006 compared with Q2/2005 and a shift in product mix."Clearly, we are pleased with the company's financial performance in the second quarter and first half of the year," stated Joseph Scaminace, Chairman and CEO. "We are especially pleased with the company's ability to generate significant cash from operations, which is a key metric we use to track our progress."
"Our focus on operational excellence and financial discipline is paying off," Scaminace said. "And, while we look to add to this performance in the second half of the year, we are well-aware that a significant amount of work remains to be done to transform the company into a truly market-facing producer of value-added specialty materials."
www.omgi.com
ENDS