US Albemarle likely to miss Q1 earnings estimates - CEO

03 March 2009 21:49  [Source: ICIS news]

HOUSTON (ICIS news)--US plastics-additives producer Albemarle will likely miss earnings estimates in the first quarter due to a continued decline in the company’s polymer segment, the company said in a mid-quarter conference call on Tuesday.

“We would have to move heaven and earth just to meet the low end of our earnings estimate in the first quarter,” CEO Mark Rohr said. “Polymers simply will not perform as well as in the fourth quarter, and it’ll be a struggle just to break even.”

Analysts surveyed by First Call previously expected the company to earn 45 cents/share for the quarter, after earning 42 cents/share in the 2008 fourth quarter.

Albemarle, whose fourth-quarter net profit fell 77.6% to $13.1m (€10.5m), said it was focused on reducing costs, with a goal of saving $200m in the 2009 fiscal year.

Albemarle idled most of its polymer production plants in the US and overseas in the fourth quarter, and the company said on Tuesday that those plants would remain down for the near future.

“We are not running these plants until demand says we should do so,” Rohr said.

In the meantime, that has given Albemarle a number of unabsorbed fixed costs, the company said. Rohr said the idling of polymer plants puts Albemarle in a squeeze, caught between high inventory left over from 2008 and plants that are not running.

The company’s profit from its polymer additives segment dropped to $6.2m in the 2008 fourth quarter, compared with $31.6m profit in the 2007 fourth quarter.

Albemarle attributed the decline to reduced volume, higher costs and downturns in the end markets of automotive, construction and consumer electronics, a trend the company said appears to be continuing in the first quarter.

Polymer volumes are down approximately 50% in the first two months of the year from year-ago levels, and Albemarle is running below 50%, the company said.

Albemarle said it anticipated lower earnings from its fine chemicals segment as well.

Fine chemicals were one of the only segments to buck the trend of fourth-quarter declines, with a 6% rise in net profit and a 23% jump in sales.

($1 = €0.80)

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By: Ben DuBose
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