US Albemarle says it sees recession bottom, limited growth

28 April 2009 19:36  [Source: ICIS news]

HOUSTON (ICIS news)--Albemarle has received strong indications that it has reached the recession bottom as volumes across all sectors continued to improve, the US polymer additive and catalyst producer said on Tuesday.

“The persistent pressures on volumes eased in March and have gotten even better in April,” chief operating officer John Steitz said on a conference call. “This gives us a good indication that we have reached the bottom.”

Steitz said sales have improved incrementally, currently up 10-20% in segments across the board from the bottom reached in January and February.

However, that still wasn’t enough to prevent Albemarle from a 60% year-over-year fall in first-quarter profit to $25.4m (€19.6m) based on weak end-market demand from the construction, automotive and electronics industries.

Moreover, the polymer additives segment posted an operating loss of $11.7m compared with a profit of $29.8m in the 2008 first quarter, Steitz said. That marked the first time the segment has posted a loss.

“What surprised us in January and February was the destocking that a lot of retailers did,” CEO Mark Rohr said.

Rohr said the company’s polymer-additives plants were still running at only 40% capacity, on average, and would remain there until a demand increase becomes more pronounced.

“We don’t anticipate significant end-market recovery before 2010,” Rohr said.

However, Rohr said March figures indicated a base in many of the company’s markets, and he expected a “prolonged period of new demand” going forward. Moreover, he said the company expected improved demand in the second quarter that would go beyond the typical seasonal increase.

Albemarle’s fine chemicals segment declined 59.5% to a profit of $8.7m, down from $21.5m in the year-ago period. That decline was largely due to reduced sales within bromine, Rohr said.

The company said it expected its pharmaceuticals and life sciences portfolio to remain strong for the remainder of the year and offset reductions in bromine volumes.

Albemarle’s catalysts segment declined 30.9%, falling to a $35.7m profit from $51.7m in the 2008 first quarter.

Cost-cutting actions recently undertaken, including job cuts, are expected to save Albemarle $30m for the full year, and those savings will start showing up in the second quarter, the company said.

“The benefit of the steps we have already taken coupled with slowly improving business trends gives us confidence in the ability to perform sequential growth for the remainder of the year,” Rohr said.

($1 = €0.77)

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By: Ben DuBose
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