US Rockwood predicts better Q2 on cost savings, pricing

29 April 2009 19:37  [Source: ICIS news]

HOUSTON (ICIS news)--Higher profit margins and further price increases will improve Rockwood Holdings' second-quarter performance, the US specialty chemicals producer said on Wednesday.

Although CEO Seifi Ghasemi conceded a lack of feedback from customers regarding near-term downstream demand in the company's end markets, he was optimistic about Rockwood's second-quarter results due largely to its internal effort to control costs.

Despite a first-quarter net loss of $3.8m (€2.9m) Ghasemi said ongoing austerity measures including workforce reductions, salary freezes and controlling capital expenditures and working capital would save the company $135m this year.

"In past years, we could predict sales due to customer [feedback], but customers are giving us no indication. It's been very erratic, but we see a positive [earnings] trend for the second quarter," he said during a conference call with analysts.

One reason for his confidence stemmed from the company's assertion that declines in the construction sector had reached a bottom. Although demand in that market dropped by 40% quarter over quarter, the rate of decline has been stable for several quarters, Ghasemi said.

While overall volumes for the quarter were down by 20%, Rockwood implemented prices hikes of about 5%. Price gains will continue, Ghasemi said, because of the nature of Rockwood's premium product portfolio.

($1 = €0.76)

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By: Larry Terry
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