) received a 20-year contract for providing slag processing and
management services to the Tangshan works in China. This deal
strategically extends Harsco's existing resource recovery services
agreement with Tangshan Iron & Steel.
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HARSCO CORP (HSC): Free Stock Analysis Report
TMS INTL CP-A (TMS): Free Stock Analysis Report
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Targeted to ameliorate the surrounding area of the steel-making
site with better handling and management of by-products, the
contract is currently projected to generate revenues surpassing
$375 million through its 20 year time period. By providing
state-of-the-art slag management tools, Harsco will speed up the
metal recovery process, thereby creating an avenue for the creation
of environment-friendly by-products from the slag generated at the
site. Then, these products shall be dispersed in the market to
benefit cement, concrete and other related industries.
The agreement entered into is quite momentous for both parties. Not
only does Tangshan Iron & Steel's social motives get
highlighted, thereby enhancing its goodwill in the market, but also
offers Harsco a major award, not to mention the profitable
long-term alliance formed between the companies.
Owing to the detrimental effects of the diminishing world steel
demand, the company's Metals and Minerals segment suffered an 8%
annual downfall in revenues to reach $360 million during its first
quarter of 2012. Margins looked quite under pressure too, mainly
due to the additional restructuring expenditures incurred during
Harsco expects a similar weakened performance from the Metals and
Minerals segment in the upcoming quarter, primarily due to the
existing downsides accruing from the European and Middle Eastern
regions. However, even though the short-term situations appear
onerous, we feel that such multi-year prestigious awards would
bolster growth for this segment incipiently at substantial levels,
paving a brighter path for the company in the long run.
However, it would be wise to remain wary of proactive peers in the
industry at all times. Big players to take note of in this regard
Hudson Technologies, Inc.
W.W. Grainger, Inc.
TMS International Corporation
The company currently retains a Zacks #5 Rank, which translates
into a short-term 'Strong Sell' rating. We also maintain a
long-term 'Underperform' recommendation on the stock.