Specialty chemicals and advanced materials company
Rockwood Holdings, Inc.
) recently reported disappointing second-quarter 2012 results, with
adjusted earnings of $1.17 per share lagging behind both the Zacks
Consensus Estimate and the year-ago quarter earnings of $1.19.
Reported profit jumped massively to $224.9 million (or $2.81 per
share) in the quarter from $94.5 million or $1.11 per share a year
ago, primarily driven by an income tax benefit of $139 million.
Revenues declined 9.4% year over year to $905.6 million in the
quarter, hurt by a negative currency translation of $75.1 million.
Sales failed to meet the Zacks Consensus Estimate of $987 million
in the quarter. A major portion of Rockwood's net sales and cost of
products sold are determined in euros and thus any unfavorable
currency fluctuation can impact the company's top line.
Management stated that the company's lithium, surface treatment
and advanced ceramics businesses improved on a year-over-year
basis, excluding negative currency effects. Lithium business
improved slightly on the back of higher selling prices and higher
volumes of lithium battery products, but currency changes and lower
volumes of butyllithium in Asia were the dampeners.
Net sales from the Surface Treatment business fell 5.4% year
over year, as lower volumes in Europe and negative currency
translation mitigated the gains from increased selling prices and
higher volumes in the U.S. and Asia.
The Performance Additives business also reported a 7.1% drop in
net sales as negative currency translation along with lower volumes
primarily in Color Pigments and Services played spoilers. However,
increased selling prices and a favorable product mix somewhat
compensated for the decline.
Net sales from Titanium Dioxide Pigments declined 17.4% in the
quarter due to negative impact of currency changes, but were
partially offset by higher selling prices. Net sales from Advanced
Ceramics fell 7.9% and Corporate and other fell 24.1% on the back
of negative currency translation.
Cash and cash equivalents stood at $343.4 million as of June 30,
2012, up from $235.2 million as of June 30, 2011. Net debt
decreased to $1,423.4 million as of June 30, 2012, from $1,555.3
million as of June 30, 2011.
The company expects lithium, surface treatment and advanced
ceramics businesses to remain stablefor the remainder of the year.
Performance Additives, which is driven by trends in the
construction market, is expected to remain flat going forward.
However, Rockwood expects that its titanium dioxide business will
perform well in the long term. The company is set to expand its
titanium dioxide business and recently acquired a TiO2 facility in
Germany with an annual capacity of 100,000 tons.
Rockwood, which competes with
PPG Industries, Inc
Sigma Aldrich Corporation
), currently holds a Zacks #3 Rank, reflecting a short-term (1 to 3
months) Hold rating.
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