NEW YORK Difficult global economic conditions have pushed graphite electrode producer GrafTech International Ltd. to close facilities and change strategy at others to remain profitable and position itself for the future, the company said in its third-quarter earnings release Oct. 31.
The Parma, Ohio-based company, which produces graphite electrodes for use in electric-arc furnace steelmaking, posted a net loss of $7.63 million in the three months ended Sept. 30 vs. net income of $29.63 million in the same period a year ago on sales that dipped 5.5 percent to $303 million.
GrafTechs industrial materials segment posted net sales of $233.3 million in the quarter, a 10.3-percent decrease from $260.2 million in the same period last year.
"We remain in a difficult operating environment, particularly for our Industrial Materials segment," GrafTech chief executive officer Craig Shular said in a statement. "We have announced initiatives ... designed to significantly improve our competitiveness, allow us to better serve customers and position our Industrial Materials business well when global economies and steel demand recover."
The company will close two of its highest-cost plants in Brazil and South Africa, pending ongoing union and work force consultations, and a machine shop in Russia. Reductions in corporate overhead, coupled with reduction in capacity by 60,000 tonnes, should help the company save $75 million annually, it said. The three facilities employ about 600 people, or 20 percent of the companys global work force.
In addition, GrafTech said it has identified certain "debottlenecking opportunities" and will initiate plans when key markets recover.
The U.S. steel market, however, looks positive because of key end markets.
"Market conditions for our global steel customers continue to be challenging; however, there are leading indicators that point to an improvement in U.S. non-residential construction and that the E.U. recession is in a bottoming process," Shular said. "Some of our U.S. steel customers are cautiously optimistic and are seeing improvement in their non-residential construction business."