According to a detailed Vulcan Materials Company statement last week, 1996 sales, net earnings and earnings per share for the US operation were at record levels.
Net earnings were US$ 188.6 million,…
According to a detailed Vulcan Materials Company statement last week, 1996 sales, net earnings and earnings per share for the US operation were at record levels. Net earnings were US$ 188.6 million, or US$ 5.36 per share, as compared with 1995 net earnings and earnings per share of US$ 166.2 million and US$ 4.63. Sales in 1996 were US$ 1,569 million, up 7% from the 1995 total of US$ 1,461 million. Pre-tax earnings totalled US$ 285 million, up 11% from 1995’s amount of US$ 258.4 million. Record fourth quarter sales of US$ 397 million were up 10% from the US$ 361.7 million reported in 1995. Net earnings of US$ 47.8 million and earnings per share of US$ 1.37 were at record levels and were 10% and 11% higher, respectively, than the comparable 1995 results of US$ 43.4 million and US$ 1.23. Pre-tax earnings of US$ 66.3 million were down slightly from 1995’s fourth quarter amount of US$ 67.4 million. All results are preliminary, and, as yet, unaudited. The statement covered full group figures, as well as separate specific figures for the Construction Materials and the Chemicals operations. The Construction Materials segment reported record fourth quarter sales of US$ 247.9 million, up 12% from the fourth quarter of 1995. Shipments of crushed stone, the segment’s principal product, increased 10%. Excluding the impact of freight to remote distribution yards, the average sales price of crushed stone increased 3%. The Chemicals segment reported record fourth quarter sales of US$ 149.6 million, up 6% from 1995, due principally to sales contributed by the Performance Systems Business Unit’s 1996 acquisitions. In the Chloralkali Business Unit, caustic soda prices were 23% below the same period in 1995 and declined 10% from the preceding quarter. However, higher revenues from chlorinated organic products substantially offset the effect of lower caustic soda sales. As a result, total Chloralkali sales were only modestly lower than the comparable 1995 totals. The Construction Materials segment reported record fourth quarter earnings of US$ 53.2 million, up 7% from the 1995 level of US$ 49.6 million. Fourth quarter 1996 results include pre-tax gains totaling approximately US$ 2.2 million from the sale of assets, primarily surplus land, as compared to the 1995 total of approximately US$ 10.6 million. Excluding the effects of the gains referable to asset sales from both years’ results, 1996 earnings were 31% higher than 1995 due principally to greater crushed stone shipments and improved prices. The Chemicals segment reported fourth quarter earnings of US$ 14.9 million, down 26% from the record 1995 level of US$ 20 million due to lower Chloralkali earnings. The decline reflects mainly the impacts of lower caustic soda prices and higher operating costs. Results for 1995 included a pre-tax charge of US$ 71 million referable to the Company’s suspended joint venture soda ash project at Owens Lake, California, US. For the full year, Construction Materials sales were at a record level of US$ 961.9 million, up 9% from the 1995 result of US$ 884.7 million. Crushed stone shipments increased 7%, reflecting strong demand in all major markets. Excluding the impact of freight to remote distribution yards, the average sales price of crushed stone increased 3%. Full-year segment earnings of US$ 197.3 million also were at a record level and increased 9% from 1995’s level of US$ 181.5 million. Full year 1996 results include pretax gains totalling approximately US$ 5.2 million from the sale of assets, primarily surplus land, as compared to the 1995 total of approximately US$ 16.5 million. Excluding the effects of the gains referable to asset sales from both years’ results, 1996 earnings were 16% better than 1995 due principally to higher crushed stone shipments and improved prices. The favorable effects of higher volume and prices were partially offset by higher operating costs due mainly to the full-year impact of new operations. The Chemicals segment posted record 1996 sales of US$ 606.9 million, up 5% from the 1995 level of US$ 576.2 million. Excluding the effects of 1995 and 1996 acquisitions from both years’ results, 1996 sales were effectively even with the prior year. Sales for Performance Systems increased due to the impact of recent acquisitions as well as internal growth. Sales for the Chloralkali Business Unit were virtually unchanged from 1995 as the effect of lower caustic soda prices was offset by higher revenues from chlorinated organic products. Chemicals reported record 1996 earnings of US$ 94.7 million, up 8% from the 1995 level of US$ 87.8 million. The increase reflects improved Performance Systems earnings. Chloralkali earnings were even with results reported for 1995. Chloralkali results in 1995 included the aforementioned US$ 7.1 million charge referable to the soda ash joint venture and a US$ 3.5 million charge for environmental remediation at the Cleve Reber superfund site. Chloralkali operating results were hurt by the decline in caustic soda prices, particularly during the second half of 1996, as well as by somewhat higher costs referable to energy and plant maintenance. Cash used for investing activities was US$ 205.8 million as compared with the 1995 total of US$ 1064 million. The increase reflects higher spending for property, plant and equipment as well as for business acquisitions. In 1996, the Company’s Chemicals segment completed several acquisitions in its Performance Systems Business Unit, all with a focus on niche markets in the water management, textile, industrial cleaning, food processing, mining and pulp and paper industries. The most significant of these was the acquisition of Mayo Chemical Company during the second quarter. The Construction Materials segment also completed several US acquisitions during the year. These included stone quarries in Alabama, Arkansas, and Texas and an aggregates distribution facility in northern Illinois. Significant spending was also made on a greenfield site in Alabama, a new lime production facility in Illinois and a second stone distribution facility in northern Illinois. Mr. H. A. Sklenar, Chairman and Chief Executive Officer, stated, “1996 was an outstanding year for Vulcan. Both of the Company’s business segments performed at high levels, and numerous sales, earnings and cash flow records were established. Continuing strong demand for construction aggregates and improved earnings from Chemicals’ Performance Systems Business Unit were the primary drivers of improved performance. With regard to 1997, our starting point is the assumption that moderate growth in GDP and stable interest rates will continue to provide a healthy economic environment for construction activity in the US. We expect the market for construction aggregates to remain strong, overall. Demand in all major construction end-use markets should equal or exceed their 1996 levels, with the exception of residential construction, which is expected to decline modestly. Based on this outlook, we expect 1997 earnings in our Construction Materials segment to equal or exceed 1996’s record result. As for our Chemicals business, 1996 was another outstanding year, despite the significant decrease in caustic soda prices during the second half of the year. We continued to make progress in developing our Performance Systems business. During 1996, Performance Systems contributed to the improvement in earnings from 1995 and we expect this trend to continue in 1997, reflecting demand growth and further progress in integrating the Unit’s recent acquisitions. Current market conditions in the Chloralkali Business Unit are mixed. The outlook for caustic soda prices remains uncertain and comparisons to 1996 are likely to be significantly unfavourable, particularly in the first half of 1997. Also, energy and maintenance costs are expected to be higher. On the other hand, continuing strong demand for chlorinated organic products should mitigate the adverse impact of these factors. Overall, for the Chemicals segment as a whole, we expect earnings to be down from 1996’s record performance.“