OM Group Announces strong first-quarter 2008 results
May 10, 2008
OM Group, Inc. (NYSE: OMG) today announced record net sales and operating profit for its first quarter ended March 31, 2008. Net sales were $480.8 million compared with $216.2 million in the corresponding period of 2007. Revenue more than doubled, due primarily to higher selling prices reflecting higher cobalt prices, strong organic growth in such key end markets as batteries and powder metallurgy, as well as to contributions from the newly acquired coatings business and the electronic technologies of Rockwood Specialties Group, Inc., which added $67.0 million in the first quarter of 2008.
‘Our 2008 first-quarter results demonstrate the powerful potential of our transformation strategy,’ said Joseph M. Scaminace, chairman and chief executive officer. ‘By balancing organic growth initiatives that harness the growing market demand for our value-added products with acquisitions that provide us with even greater end market and geographic diversity, we are building a company that delivers sustainable profitability while diminishing the impact of metal price volatility on our results.’
Gross profit increased to $136.7 million in the first quarter of 2008 versus $72.2 million in the comparable 2007 quarter. The increase was attributable primarily to a higher cobalt reference price, acquisitions, greater volume and a gain of $5.8 million on cobalt forward purchase contracts. As a percentage of net sales, gross margin fell due to an increase in low-margin cobalt metal resale and foreign currency exchange rates. Operating profit in the quarter was $94.6 million versus $46.8 million in the prior year.
Income from continuing operations was $55.6 million, or $1.82 per diluted share, in the first quarter of 2008, compared with a loss of $18.5 million, or $0.63 per diluted share, in the 2007 period. The loss in the first quarter of 2007 was attributable primarily to higher interest expense, a loss on redemption of high-yield debt and income tax expense from repatriating cash.
‘Despite today’s global economic uncertainties, we remain optimistic about our near-term and long-term growth potential, given the vitality and geographic diversity of the majority of the markets we serve,’ said Scaminace. ‘With few exceptions, demand for our products remains strong, if not increasing steadily.’
‘The global supply and demand balance for cobalt remains tight, as demand continues to grow with no significant increase in supply anticipated in the near future,’ Scaminace concluded. ‘Our efforts to mitigate the impact of fluctuating cobalt prices encompass a broad range of initiatives that include diversifying our raw material sources, maintaining a tight reign on inventories and shortening our supply chain wherever possible.’
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