Ferro Second Quarter Sales Drop 19%; Consolidations Planned in Europe
Ferro Corp. recently announced net sales of $482 million for the three-month period ended June 30, 2012, a decline of 19% compared with net sales of $594 million in the same quarter last year. Reduced sales of Electronic Materials products, including precious metal sales, reportedly drove the decline in consolidated net sales. In addition, reduced customer demand in Europe due to a weaker economic climate and changes in foreign currency exchange rates contributed to the decline in sales compared with the prior-year quarter.
Reduced demand for conductive pastes used in solar cell applications, metal powders used in a variety of electronic products and ceria-based surface finishing materials resulted in a $90 million decline in sales for the Electronic Materials segment, including a $63 million decline in sales of precious metals due to reduced volume and lower silver prices.
Sales declined relative to the prior-year quarter to a lesser extent in the Performance Coatings, Color and Glass Performance Materials, Polymer Additives and Specialty Plastics segments. Sales declines in these businesses were largely a result of changes in foreign currency exchange rates.
“Sales and earnings were negatively impacted by the effects of a weakening economic environment in Europe and higher than expected healthcare and pension expenses,” said James F. Kirsch, chairman, president and CEO. “The unexpected healthcare and pension expense reduced adjusted earnings by approximately $0.03 per share. We are taking aggressive steps to lower costs in Europe with the successful rollout of our new management information systems platform in the region on July 1. We expect this new platform to provide the tools that will allow us to reduce future operating costs and administrative expense. In addition, we expect to move forward on staffing reductions that will lower annual costs by approximately $5 million in our European operations through consolidation of certain manufacturing and administrative resources in our Performance Coatings business.”
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