NEW YORK Exide
Technologies is adapting to "the new external realities" of the
secondary lead market by closing and idling two of its lead
recycling plants, the company said, as it recorded a wider net
loss for its fiscal second quarter.
The company posted a net loss of
nearly $13.9 million for the three months ended Sept. 30,
nearly four times the $3.6-million net loss recorded in the
same period a year ago, on sales that fell 7.9 percent to
$711.7 million from almost $773 million.
"Continued high core (junk
battery) costs and lower (London Metal Exchange) base pricing"
had impacted the companys bottom line, Exide executive
vice president and chief financial officer Phillip A. Damaska
said Monday during a conference call on the companys earnings results.
"The fundamental dynamics of
lead recycling in North America have changed," with the ratio
of the junk battery price to the LME becoming "higher and less
predictable" over the past year, Exide president and chief
executive officer James R. Bolch said.
The introduction of 400,000
tonnes of capacity to the marketa reference to the
opening of plants by Johnson Controls Inc. and Gopher Resource
LLChad likely exacerbated high junk costs, he added.
"We believe in this environment
it is no longer prudent to maintain capacity in excess of our
internal needs," Bolch said, estimating that the closure of the
companys Frisco, Texas, plant and idling of its Reading,
Pa., facility will remove 150,000 long tons of capacity from
Bolch disclosed that the company
will avoid capital expenditures of $50 million to bring the
Frisco and Reading plants into compliance with environmental
The capacity removal also means
Exide is exiting third-party lead sales to focus on its
internal requirements, with the company noting that "profit on
third-party lead sales was down substantially" for the six
months ended Sept. 30.
Transportation Americas division produced some 164,000 tons of
lead during the six-month period, down about 3 percent from the
same period a year earlier. Some 10 percent of this was sold to
third parties and another 12 percent was sold under tolling
Junk battery supply had improved
notably since the end of September, Bolch said, adding that the
Milton, Ga.-based company expects a "normal" battery season
"The scarcity of cores this year
has not just been an issue in the price we had to pay, but from
time to time we were running very thin, which brings
operational issues," he said. "We now have ample supply and are
seeing better pricing in the market."
By exiting third-party sales,
there would be "less pressure" on the company to acquire junk
batteries on the open market.