Chlor alkali products maker Olin Corp. (OLN) Monday reported a decline in second quarter profit on lower sales , hurt by weak revenues from the Chlor Alkali segment. Earnings and revenues, however, came in above estimates. The company also provided third quarter forecast, which is below current analysts estimates.
For the second quarter, net income dropped to $27.8 million or $0.36 per share from $35.5 million or $0.47 per share in the same quarter a year ago.
On average, six analysts polled by Thomson Reuters expected earnings of $0.33 per share for the quarter. Analysts' estimate typically excludes one-time items.
Sales for the quarter declined to $383.0 million from $428.3 million in the year-ago quarter. Analysts expected the company to report revenue of $382.05 million for the quarter.
In the immediately preceding second quarter, Olin Corp. reported a profit that increased to $46.7 million or $0.60 per share, helped by strong results from its Winchester business. Sales were up at $400.6 million.
For the quarter under review, earnings from Chlor Alkali dropped 32% from the prior year, reflecting lower shipment volumes of both chlorine and caustic soda. ECU netbacks were down slightly from the year-ago quarter. Second quarter 2009 Chlor Alkali operating rate was 70%, compared to an operating rate of 89% last year.
Sales from Chlor Alkali product were $242.4 million, down compared to $312.2 million in same quarter last year. Winchester sales rose to $140.6 million from $116.1 million in the year-earlier quarter.
Joseph Rupp, President, and Chief Executive Officer said, "Winchester achieved the highest level of quarterly sales and earnings in its history, reflecting the continuation of the stronger than normal demand that began in the fourth quarter of 2008."
Operating income was $35.1 million, compared o $45.9 million in the same quarter a year ago.
For the six-month period, net income was $74.5 million or $77.8 per share, compared to $72.8 million or $75.2 per share in the year-ago period. Sales dropped to $783.6 million from $827.4 million in the comparable period last year.
Looking ahead to the third quarter, the company expects earnings of $0.20 per share. Analysts currently anticipate earnings of $0.28 per share for the quarter. Forecast includes an anticipated $44 million pretax recovery of environmental costs incurred and expensed in prior periods.
Commenting on the forecast, the company said, the combination of the precipitous decline in caustic soda pricing and the continuation of weak demand will likely result in a third quarter segment loss in the Chlor Alkali business. ECU netbacks are expected to decline approximately 40% in the third quarter, while expecting strong demand for Winchester.
The company also declared a dividend of $0.20 per share, payable on September 10, 2009 to shareholders of record at the close of business on August 10, 2009.
OLN closed Monday's regular trading at $14.26, up $0.23 or 1.64%, on a volume of 1.79 million shares. In after-hours, the stock traded in the range of $13.23, down $1.03 or 7.22%, to trade at $13.23.
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