By: CRAIN'S CLEVELAND BUSINESS
March 5, 2013
MAYFIELD HEIGHTS, OHIO — Loss-plagued Ferro Corp., which is the object of an unsolicited takeover offer initiated this week by Fairlawn, Ohio-based A. Schulman Inc., has reported a wider fourth-quarter loss than in the fourth quarter of 2011.
The producer of specialty chemicals said the loss widened to $64 million, or 74 cents per diluted share, from a loss of $61 million, or 71 cents a share, in the fourth quarter of 2011.
Ferro said it recorded special charges of about $59 million in the fourth quarter of 2012, compared with about $67 million in the fourth quarter of 2011.
Sales at Ferro fell 8 percent, to $406 million from $443 million.
The company said its six operating segments reported lower sales in the latest fourth quarter compared to the prior year. Precious metal sales accounted for 29 percent of the sales decline, or $11 million. The largest sales decline, on a value-added basis (excluding the impact of precious metal sales), was in the Electronic Materials segment, where net sales declined 22 percent primarily due to reductions in demand for solar paste products and precious metal powders and flakes for other electronics uses.
Ferro announced Feb. 6 that it had sold the solar pastes business to Heraeus of Germany for an undisclosed price. The business had been a millstone around Ferro's neck the last two years because of a sharp decline in the production of solar cells, where the pastes are used.
Ferro said weakness in Europe, particularly in southern Europe, contributed to the decline in sales, principally in the Performance Coatings and Color and Glass Performance Materials segments.
Looking ahead, Ferro expects results to improve in 2013 due to initiatives that are expected to generate $25 million to $30 million of cost savings in 2013 and the company's exit from the solar pastes business. The expected improvements will be partly offset by inflation and what Ferro called "the normalization of incentive compensation."
"Based on current market conditions, including persistent weakness in European macroeconomic conditions, coupled with the expected timing associated with the cost savings programs, the company expects the first quarter of 2013 will be the lowest earnings quarter of the year, in the range of 2-5 cents per share," Ferro stated.