US KMG Chemicals warns on fiscal Q4, cites raw material costs

02 September 2011 15:02  [Source: ICIS news]

HOUSTON (ICIS)--KMG Chemicals expects fiscal fourth-quarter net income to fall short of expectations because of high raw material costs in its core electronics business, the US-based specialty chemicals firm said on Friday.

Also weighing on the three months ended 31 July are integration costs related to the consolidation of KMG’s manufacturing operations, the company said in a preliminary results update.

KMG said fiscal fourth-quarter net income will be about half of the $2.6m (€1.8m) it achieved in the preceding fiscal third quarter ended 30 April.

“Pricing actions were implemented in the third and fourth quarters to capture the raw material cost increases incurred earlier in the year,” CEO Neal Butler said.

“However, these costs continued to escalate unexpectedly through the fourth quarter, pushing our pricing strategy about one quarter behind schedule,” Butler said.

Butler added that KMG has put in place a pricing strategy to capture cost increases.

“We expect to return to normalised margins early in fiscal 2012,” he said.

KMG is expected to disclose its final fiscal fourth-quarter results on 13 October.

($1 = €0.70)

By: Stefan Baumgarten
+1 713 525 2653

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