US WR Grace's Q2 net income down 8.6%, sales remain flat

25 July 2012 11:47  [Source: ICIS news]

LONDON (ICIS)--WR Grace’s second-quarter net income in 2012 fell by 8.6% year on year to $69.3m year on year, despite a rise in sales, the US specialty chemicals company said on Wednesday.

The company’s net profit in the quarter included deductions of $19.5m relating to the Libby Medical Program settlement.

Second-quarter sales totalled $826.7m (€686m), flat compared with the same period last year, “as improved base pricing (+4.7%) and higher sales volumes (+2.7%) were offset by unfavourable currency translation (-4.3%) and lower rare earth surcharges (-3.1%),” Grace said.

Sales in emerging regions represented 36.3% of sales and grew 13.3% year on year compared with the second quarter of 2011.

Adjusted earnings before interest and tax (EBIT) in the second quarter increased 8.1% year on year to $143.6m, primarily because of “higher segment operating income in Construction Products, lower incentive compensation expense, and lower corporate expenses driven by expense control efforts and the previously announced restructuring initiatives.”

Grace said its adjusted EBIT margin improved to 17.4% compared with 16.1% in the 2011 second quarter.

“Gross profit of $304.1m was unchanged compared with the prior-year quarter as improved pricing and productivity were offset by higher raw material costs and higher manufacturing costs,” the company added.

“I am pleased with our performance this quarter, particularly our overall pricing and volume growth, and the sequential margin improvements we targeted and achieved in our Materials Technologies and Construction Products operating segments,” said Fred Festa, Grace’s chairman and CEO.

Grace affirmed its outlook for 2012 adjusted EBIT in the range of $510m-530m, up 6-11% compared with 2011 adjusted EBIT of $478.6m.

The company expects 2012 adjusted earnings before interest, taxes, depreciation and amortization [EBITDA] in the range of $630m-650m.

“Despite renewed headwinds from Europe, we affirm our outlook for adjusted EBIT. We remain confident in our ability to move our business forward, and we are prepared to deliver another year of solid earnings growth,” Festa said.

($1 = €0.83)

By: Franco Capaldo
+44 (0)20 8652 3214

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