Ferro Corp. recently reported results for the second quarter, which ended June 30. Second quarter diluted earnings per share attributable to common shareholders was $0.11, compared with a loss of $0.02 per share in the second quarter of 2013. After recognition of substantially all of the Specialty Plastics and Polymer Additives segments as discontinued operations, Ferro reported second quarter 2014 diluted earnings per share from continuing operations of $0.15, vs. a loss of $0.06 per share in the same period last year.
Included in the results from continuing operations are restructuring activities, other nonrecurring income and expense items, and gains and losses on asset sales. Adjusting for these items, second quarter 2014 adjusted diluted earnings per share increased by 73% to $0.19 from $0.11 in the second quarter of 2013.
The company attributed the increase in profitability primarily to reduced selling, general and administrative expenses associated with the successful execution of its value creation strategy and continued expansion of gross profit margins. Ferro reported net sales of $294 million in the second quarter of 2014, compared with net sales of $319 million in the second quarter of 2013. Excluding the impact of exited business lines, primarily related to the metal powders and flakes business line divested in October 2013, and excluding precious metal sales, value-added sales were flat in the second quarter vs. the same period last year.
The company continues to experience value-added sales expansion in emerging markets, including growth of 6% in Asia-Pacific and 3% in Latin America. In Asia, value-added sales increased across all segments. In Latin America, the increase in value-added sales was primarily driven by increased demand for container glass coatings and higher sales of digital inks for tile printing. Value-added sales declined in Europe by 1% primarily due to lower demand for porcelain enamel products and a shift in mix to lower-priced but higher margin products in the Performance Colors and Glass segment. Volumes for European Performance Colors and Glass increased by approximately 9%, driving an 18% increase in gross profit, while value-added sales for the segment in Europe were nearly flat. In the U.S., value-added sales declined by 4% due to reduced sales of surface polishing products in the Pigments, Powders and Oxides segment.
“Ferro had another strong quarter of earnings growth with adjusted EPS increasing by 73%,” said Peter Thomas, chairman, president and CEO. “While second quarter value-added sales were short of expectations, we continue to improve profitability in all regions, and we are experiencing sales growth in Asia and Latin America. From a product line perspective, results for the Performance Colors and Glass segment were particularly strong with volume growth of approximately 15%, resulting in increased gross profit of $4 million, a 13% improvement.
“We remain on track with our previously discussed strategic initiatives. We continue to work on several strategic growth opportunities focused on accelerating growth in emerging markets and expanding capacity in our core frit-based businesses. Though we remain cautious about sales growth in the second half, primarily based on lower GDP projections in Europe and the U.S. and weakness in our Pigments, Powders and Oxides segment, we continue to take actions to enhance growth and improve profitability. Consequently, we are increasing our 2014 adjusted earnings guidance to $0.52 to $0.57 per diluted share from our prior guidance of $0.48 to $0.53 per diluted share.”