GrafTech International Ltd. (GTI), Thursday reported a profit for the third quarter, which came in well-ahead of the Street consensus, on stronger than anticipated European steel operating rates as well as continued increases in steel operating rates in several geographies. Looking ahead, the company raised its operating income outlook for fiscal 2009. GrafTech shares gained more than 14% following the news in intra-day trading at the New York Stock Exchange.
The company posted net income of $7 million or $0.06 per share for the third quarter, much lower than $83 million or $0.70 per share in the prior year quarter.
On an operating basis, net income before special items dropped to $18 million or $0.15 per share from $66 million or $0.55 per share in the year-ago quarter. On average, 7 analysts polled by Thomson Reuters expected the company to report earnings of $0.06 per share for the third quarter. Analysts' estimates typically exclude special items.
Third quarter net sales decreased to $165 million from $316 million in the third quarter of 2008, hurt by lower volumes associated with significantly reduced demand driven by the global economic recession. Five analysts had a consensus revenue estimate of $162.12 million for the third quarter.
Gross profit declined to $47 million or 28.3% of sales, as compared to $114 million or 36.1% of sales in the previous year quarter. The reduction in gross profit percentage was attributed to unfavorable fixed cost absorption associated with lower sales volumes and the flow-through of higher cost raw materials.
For the nine-month period of 2009, GrafTech reported a net loss of $21.8 million or $0.18 per share, compared to net income of $165.9 million or $1.45 per share in the previous year period.
Net sales for the period dropped to $456.7 million from $925.3 million in the prior year period.
For the full year 2009, GrafTech raised its operating income outlook to a range of $80 million to $85 million from its previous guidance of $60 million to $70 million.
The company said, "While the global economy remains fragile, we continue to expect an improvement in fourth quarter results as customers will have largely completed inventory destocking initiatives and continue restocking."
GrafTech is currently trading at $14.22, up $1.55 or 12.23% on a volume of 4.66 million shares.
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