CHICAGO Globe Specialty
Metals Inc. fell deeply into the red in its fiscal third
quarter as higher revenues werent enough to stem losses
from longer-than-expected maintenance outages, overseas
write-offs and lower selling prices.
But the New York-based silicon
producer said it expects results to improve in coming quarters
as benefits from the outages are realized, even if selling
prices for its products remain flat.
"We are disappointed with our
financial results for the (fiscal) third quarter," chief
executive officer Jeff Bradley said in a statement released
with earnings data. "While we anticipated a reduction in
earnings caused by lower average selling prices, we did not
anticipate the extent of the cost impact of the maintenance
outages and other cost increases."
Globe posted a net loss of
nearly $40.14 million for the three months ended March 30 vs.
net income of more than $11.61 million in the same period last
year despite a 12.9-percent jump in sales to $195.85 million. A
$30.78-million net loss of the first nine months of the fiscal
year was in contrast to net income of $45.75 million a year
earlier on sales that rose 12.2 percent to $576.49 million.
The losses came in part as
silicon metal contracts for 2012 were replaced by 2013
contracts with selling prices that were an average 4 percent
lower, the company said. Also hurting results was a shift
toward more silicon metal production as a result of
Globes June 2012 acquisition of operations
in Bécancour, Quebec (
amm.com, June 6), the company said.
Also impacting the results
were higher production costs related to maintenance outages and
"other inefficiencies" at Globe plants in Alloy, W.Va.;
Beverly, Ohio; Bridgeport, Ala.; and Niagara Falls, N.Y.; as
well as at facilities in Argentina. In addition, Globe saw a
smaller contribution from Alden Resources LLC, Corbin, Ky.,
because of higher costs and lower coal production, and Alabama
Sand & Gravel Inc., Billingsley, Ala., saw increased costs
from the addition of another quartz wash plant.
Another big hit to earnings came
from write-downs on the value of Globe operations overseas,
including a $16.9-million pre-tax charge for the write-off of
Nigerian exploratory mining licenses, Globe said. Because of
"local instability and security risks," that project is "no
longer a viable business opportunity."
Globe said it had taken a
$20.4-million pre-tax write-down on equipment acquired to make
solar-grade silicon because the technology is "no longer
commercial viable." The company also suffered a $7.1-million
pre-tax charge from its electrode factory in China operating at
less-than-full capacity and a $6-million write-down on its
business in Argentina.
Globe executives said during a
conference call that about 80 percent of production from the
companys operations in Argentina is shipped to Europe,
where the economy continues to struggle and prices are