Ferro Corporation announced 1 March 2007 that sales for the year ended 31 December 2006 were a record USD 2.04 billion, up 8.5% from 2005. Sales for the 4Q were USD 497 million, an increase of 8.6% fr…
Ferro Corporation announced 1 March 2007 that sales for the year ended 31 December 2006 were a record USD 2.04 billion, up 8.5% from 2005. Sales for the 4Q were USD 497 million, an increase of 8.6% from the 4Q of 2005. Income from continuing operations for 2006 was USD 20.6 million compared with USD 17.1 million in 2005. In 2006, operating income included net pre-tax expenses of USD 34.9 million primarily related to previously announced manufacturing rationalization activities and costs associated with an accounting investigation and restatement. In 2005, operating income was reduced by pre-tax expenses of USD 14.1 million, primarily related to expenses from restructuring and the accounting investigation and restatement. “We delivered substantial growth in sales, and a strong 29% increase in our total segment income in 2006”, said Chairman, President and Chief Executive Officer James Kirsch. “We have initiated important restructuring programs that will provide significant future cost savings. And with a new senior team in place, we are committed to delivering sustained global growth and improved profitability in 2007 and beyond”. Sales growth in 2006 was a result of strong performances in Ferro“s Electronic Materials, Performance Coatings and Color and Glass Performance Materials segments. Sales in the Polymer Additives and Specialty Plastics segments were hit by weakness in the US residential construction and automotive markets in the 2H of the year. Increased prices, including higher precious metal prices, and improved product mix across all of the company“s businesses, were the primary drivers of sales growth for 2006. Overall volume declined slightly as volume improvements in Electronic Materials and Performance Coatings were offset by declines in Specialty Plastics and Polymer Additives. Gross margins were 20.3% of sales for the year, compared with 20.4% of sales in 2005. The company“s 2006 gross profit was reduced by USD 4.6 million of costs related to manufacturing rationalization activities. Gross margins were also hit by increased precious metal sales, compared to 2005. Precious metals costs are largely passed through to customers with minimal margin contribution. Selling, general and administrative (SG&A) expense was USD 305.2 million in 2006, or 15.0% of sales. Included in the 2006 SG&A expense were USD 8.2 million in charges, primarily related to the accounting investigation and restatement. SG&A expense in 2005 was USD 310.1 million, or 16.5% of sales, including charges of USD 10.5 million related to the accounting investigation and restatement. Total segment income for 2006 was USD 151.8 million, up 29% from the prior-year level of USD 118.0 million. The increase reflected higher income from all segments except Polymer Additives. The company expects higher interest expense and smaller losses from forward supply contracts in the 1Q 2007, compared with the prior-year period. Earnings for the 1Q are expected to be between USD 0.17 and USD 0.22 per share. The estimate includes expected charges of approximately USD 0.05 per share, primarily from ongoing manufacturing rationalization activities. Ferro Corp. reported income from continuing operations of USD 0.19 per share in the 1Q of 2006.