US WR Grace swings to a Q4 net loss on $365m charge

06 February 2013 12:28  [Source: ICIS news]

LONDON (ICIS)--WR Grace swung to a fourth-quarter net loss of $111.6m (€82.6m) from a net profit of $58.1m in the prior-year quarter because of a $365m non-cash charge recorded to adjust the company’s asbestos-related liability, the US-based catalyst producer said on Wednesday.

On 24 January, Grace announced it will take the charge in its fourth-quarter earnings because of an increase in its recorded asbestos-related liability. That liability is increasing to $2.1bn from $1.7bn, according to the company.

Grace is increasing its asbestos-related liability because the company now expects an increase in the settlement values of warrant and deferred-payment obligations. The obligations are payable to the company's asbestos personal-injury trust under the terms of Grace's reorganisation plan.

Fourth-quarter sales of $797.8m declined 3.4% year on year higher sales volumes (+5.7%) and improved base pricing (+2.1%) were offset by lower rare earth surcharges (-9.2%) and unfavourable currency translation (-2.0%). 

Sales in emerging regions represented 39.1% of sales and grew 16.1% compared with the prior-year quarter. Acquisitions, net of divestitures, contributed $3.0m (+0.4%) to sales in the quarter, Grace said.

The group’s adjusted earnings before interest and tax (EBIT) of $133.4m increased 23.3% year on year because of higher segment operating income in all three operating segments and lower corporate expenses. Adjusted EBIT margin improved to 16.7% compared with 13.1% in the prior-year quarter, Grace added.

Fred Festa, Grace’s chairman and CEO, said: “All three operating segments demonstrated solid organic growth and strong increases in operating earnings. This performance, combined with our disciplined expense control, allowed us to improve margins and stay on track with our longer-term earnings goals.”

Net income for the full year ended 31 December 2012, was $94.1m compared with $269.4m from the same period in the year before, while sales decreased 1.8% to $3.16bn as improved base pricing (+4.1%) and higher sales volumes (+2.9%) were offset by lower rare earth surcharges (-5.3%) and unfavourable currency translation (-3.5%).

Looking ahead, Grace expects, as of 6 February 2013, adjusted EBIT to be in the range of $560m-580m, an increase of 8-12% compared with 2012 adjusted EBIT.

($1 = €0.74)

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

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