INDEPENDENCE, OHIO — Officials with specialty chemicals and plastics maker Ferro Corp. fielded questions from shareholders about the direction of the company at the firm's annual meeting, held May 22 in Independence.
Shareholders also approved Jeffry Quinn, David Lorber and Ronald Vargo as members of Ferro's board of directors. Quinn and Lorber had been nominated by a group of shareholders who were unhappy with Ferro's recent financial performance.
One shareholder asked how officials would address the possibility of A. Schulman Inc. raising its takeover offer for Mayfield Heights, Ohio-based Ferro to $9 or $10 per share. Fairlawn, Ohio-based Schulman had offered $6.50 per share for Ferro in early March. Ferro's per-share stock price was near $7.10 in late trading May 22.
Board Chairman William Lawrence — who presided over the meeting — responded by saying that Ferro "would consider any additional proposal very carefully and seriously ... and will decide if it's in the best interest of shareholders."
"We did the same with Schulman's offer and decided it wasn't in the best interest of shareholders and that we would pursue our value creation strategy," he said. "We would do the same not just with Schulman but with any other offer."
Another shareholder asked about Ferro's ability to handle recent controversy. Lawrence countered that the current board "is committed to working constructively with the two new directors ... and I believe they will work constructively with us."
"We've embarked on a value creation strategy, and I believe we're making god progress," added Lawrence — a former executive with industrial firm TRW Inc. who has been a Ferro board member since 1999.
When asked about the firm's recent losses — almost $400 million on sales of about $1.8 billion in 2012 — Vice President and Chief Financial Officer Jeff Rutherford explained that a major portion of the 2012 loss was a write-off of goodwill in connection with Ferro's announcement to sell its solar unit. The firm also took a charge on its electronics unit and wrote off assets, Rutherford said, adding that Ferro now is working to reduce annual operating costs by $85 million over the next three years.
Ferro's 2012 loss was fueled by a sales drop of more than 50 percent in the firm's electronic materials unit, which had included solar pastes. That unit had once been a growth driver for Ferro, but it had declined to the point where the business was sold to German industrial firm Heraeus for an undisclosed price.
For the first quarter of 2013, Ferro's sales fell 10 percent to $417 million vs, the same period in 2012, while its quarterly profit swooned about 75 percent to less than $900,000 in the same comparison.
At the meeting, officials also were asked about Ferro's future direction, particularly in light of the financial struggles of the European market. President and CEO Peter Thomas said the firm has avoided some of the challenges of "traditional Europe" by importing some products into the region from a plant in Egypt.
Thomas added that North America's share of Ferro sales has increased from 36-37 percent in 2012 to 43 percent so far in 2013, with much of the growth coming from the building and construction and automotive markets.
Thomas — who joined Ferro in 2000 — had been holding his roles on an interim basis since late 2012, when CEO James Kirsch resigned. The interim tag was lifted in April.
New board members Quinn and Lorber and current member Vargo each were elected to three-year terms that expire in 2016. Board members Sandra Austin and Richard Brown did not seek re-election. Austin had been a board member since 1994, while Brown joined in 2009.
Quinn and Lorber were nominated by a shareholders' group that includes FrontFour Capital Group of Stamford, Conn., and Quinpario Partners LLC of St. Louis. Quinn formerly served as a top official at specialty chemicals and plastics maker Solutia Inc. of St. Louis.
Lawrence wrapped up Ferro's annual meeting by thanking shareholders for their support in what he described as "a very trying and difficult year."
Ferro's board "is confident that we have the right leadership to deliver on value creation over the next year or two," he said.