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Harsco reports facing challenging 1st quarter

Keywords: Tags  Harsco, steel, scrap, mill services, earnings report, Patrick Decker

NEW YORK — Lower steel output by some customers will dampen sales for mill services provider Harsco Corp. in the first quarter, the company said Feb. 14 as it reported a financial loss in the final three months of a challenging 2012.

Camp Hill, Pa.-based Harsco, which announced a net loss in both the fourth quarter and the full year, said it expects more headwinds in the first three months of 2013 as the steel and construction sectors face a normal seasonal slowdown.

The company’s metals and minerals segment, which provides services to steel mills, is expected to see a 6- to 8-percent drop in revenue in the first quarter compared with the same period last year due to lower production at some steel mills and the carryover impact of expired contracts that have not yet been fully offset by the start-up of new ones.

"Despite this expected revenue decline, operating margin is anticipated to be in line with the prior-year quarter due to the company’s cost-reduction actions and the growth of higher-return contracts as part of the overall mix," Harsco said.

Harsco’s expectation of a challenging first quarter comes on the heels of a weaker fourth quarter, when the company saw "further deterioration in the metals markets," Harsco president and chief executive officer Patrick Decker said in a statement. In the final three months of the year, Harsco’s metals and minerals unit reported operating earnings of $5.86 million, down 60.5 percent from $14.83 million a year earlier on revenue that fell 10.2 percent to $334.36 million.

The company as a whole posted a fourth-quarter net loss of $264.36 million vs. a $92.47-million loss a year earlier as sales fell 3.3 percent to $766.33 million. For the full year, Harsco’s net loss jumped to $254.61 million from $11.51 million in 2011 on a 7.8-percent decline in sales to $3.05 billion.

"As we move forward, we expect to see continued volatility in our end markets and certain geographies. As a result, we will heighten our focus on the elements of our business we can control. Improving cash flow and cash returns through disciplined capital allocation and increased operational efficiency will remain a key priority," Decker said.

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