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Ferro Q4 Loss Widens, Outlines Value Creation Strategy; Backs FY13 Adj. EPS View

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Ferro Corp. (FOE: Quote) reported that its fourth-quarter net loss attributable to common shareholders winded to $63.88 million, or $0.74 per share, from $60.96 million, or $0.71 per share, in the fourth quarter of 2011.

The adjusted net loss attributable to common shareholders for the 2012 fourth quarter was $6 million, or $0.07 per share, versus a loss of $5 million, or $0.06, in the prior year's quarter. Analysts polled by Thomson Reuters expected the company to report a loss of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

The company recorded special charges of approximately $59 million in the fourth quarter of 2012, compared with approximately $67 million in the fourth quarter of 2011.

Net sales for the fourth quarter of 2012 were $405.90 million, compared with $442.70 million in the fourth quarter of 2011. Four analysts had consensus revenue estimate of $392.50 million for the quarter.

The company said it is implementing action plans to enhance returns, including rationalization of product portfolios and improving working capital and fixed asset utilization. Assets that cannot generate sufficient returns are being redeployed, divested or curtailed.

The company also said it plans to reduce operating costs by more than $50 million over the next two years by simplifying the organizational structure, streamlining processes to make operations more efficient, and substantially reducing infrastructure and support costs. To facilitate this cost reduction, the commercial and manufacturing organizational structures are being reconfigured, reducing the need for regional management and eliminating redundancies across product lines, the company said.

The back office infrastructure also will be overhauled, with functional support organizations moving from a local to a regional or global model, the company said.

The company noted that it will continue to pursue prudent and profitable growth opportunities with high return potential. The company's investments in digital inks and glazes for the tile market and expansion into Northern Africa, Eastern Europe and Asia are examples of such opportunities.

Adjusted earnings per share for 2013 are still expected to be in the range of $0.25 to $0.30 per share. The expected increase in earnings compared with 2012 will be driven primarily by initiatives now underway that are expected to generate $25 million to $30 million of cost savings in 2013 and the exit from the solar pastes business. Analysts expect the company to report earnings of $0.27 per share for fiscal 2013.

The company expects the first quarter of 2013 will be the lowest earnings quarter of the year, in the range of $0.02 to $0.05 per share. Analysts expect the company to report earnings of $0.05 per share for the first-quarter.

Adjusting for the impact of the solar pastes transaction and before the impact of changes in foreign currency rates, sales growth is expected to be approximately 2%. For the year, cash flow is expected to be approximately breakeven.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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