US KMG Chemicals’ fiscal Q2 net income falls 34%, sales drop 15%

08 March 2013 14:08  [Source: ICIS news]

HOUSTON (ICIS)--KMG Chemicals’ fiscal 2013 second-quarter net income fell 34% year on year to $1.6m (€1.2m) on a 15% decline in sales to $57m, the US specialty chemicals firm said on Friday.

The Houston-based producer said that weakness in the North American semi-conductor market hurt its electronics chemicals business. At the same time, demand for KMG’s wood-treating chemicals fell because of competitive pressures.

KMG’s operating income for the three months ended 31 January fell to $3.2m, from $4.9m in the same period a year ago. However, gross profit margin increased to 27.6%, from 25.6% in the year-ago period, because of cost savings and improved efficiency, the company said.

Electronic chemicals segment sales were down 7.8% year on year to $35.6m on lower volumes as semiconductor manufacturers reduced inventories and slowed production in response to softer consumer demand for high-tech electronic devices, KMG said.

In the wood-treating chemicals segment, KMG’s sales were down 25.4% year on year to $21.2m because of competitive pressures from alternative processes and treatments in the rail tie treating market, as well as a temporary drop in demand from utility pole treating customers, the company said.

As for its outlook, CEO Neal Butler said that KMG was encouraged by recent positive trends in electronic chemicals where customer demand began to strengthen and volumes improved.

Butler added: “We remain confident in our consolidation strategy, as we continue to identify, evaluate and pursue key opportunities – including the establishment of a new market platform in fiscal 2014 - that will drive earnings growth, increase cash flow and create lasting value for our shareholders.”

($1 = €0.76)

By: Stefan Baumgarten
+1 713 525 2653

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