Ferro's Second Quarter Sales Increase 9%
Gross profit was $114 million, or 19.3% of sales, during the 2011 second quarter, compared with $122 million, or 22.5% of sales, during the second quarter 2010. Excluding charges, gross profit was 24.3% of sales, excluding precious metals in the 2011 second quarter, compared with 27.8% in the prior-year quarter. The decline in gross profit dollars was primarily driven by reduced sales volume of conductive pastes sold to manufacturers of solar cells. Demand for these pastes declined due to excess customer inventory of completed solar power modules, particularly in the European solar market. Gross profit as a percent of net sales also declined compared with the prior-year quarter, because of increased sales of precious metals. The cost of precious metals is passed through to customers with minimal contribution to gross profit. During the 2011 second quarter, gross profit was reduced by charges of $1.3 million, primarily related to residual costs at closed manufacturing sites involved in restructuring actions. In the second quarter 2010, gross profit was reduced by charges of $2.5 million primarily due to accelerated depreciation and severance costs resulting from manufacturing restructuring actions.
“Ferro delivered solid earnings in the second quarter, despite the expected slowdown in sales of our conductive pastes for solar applications,” said James F. Kirsch, chairman, president and CEO. “Our Performance Coatings, Color and Glass Performance Materials, and Specialty Plastics businesses all recorded sequential improvements in segment income from the 2011 first quarter to the second quarter as a result of seasonal gains and operational execution improvements that we implemented globally. As we anticipated, segment income declined in Electronic Materials due to reduced customer demand resulting from excess inventory of completed solar power modules. We continue to invest with confidence in the people, products, and manufacturing resources that will help drive our future sales growth and profitability improvements.”
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