Chemical and ammunition maker Olin Corp. (OLN) on Monday reported a 54% decline in profit for the fourth quarter from last year, hurt by lower sales of chlor alkali products that more than offset an increase in Winchester sales. Looking ahead, the company provided earnings outlook for the first quarter of fiscal year 2010.
The Clayton, Missouri-based company's net income for the fourth quarter declined to $21.8 million or $0.28 per share from $47.2 million or $0.61 per share in the year-ago period. In the preceding third quarter, the company had reported net income of $39.4 million or $0.50 per share.
On average, five analysts polled by Thomson Reuters expected the company to report a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.
The latest quarter's results include $37.0 million of pretax recoveries of environmental costs incurred and expensed in prior periods, and a $1.2 million pretax gain associated with the sale of a former manufacturing facility.
Sales for the fourth quarter were $350.9 million, down 19% from $434.2 million in the same period last year and from $397.0 million in the prior quarter. Analysts had a consensus revenue estimate for the year of $329.60 million.
Operating income for the quarter dropped to $36.2 million from $65.9 million in the same period last year.
Segment-wise, Chlor Alkali product sales for the quarter were $224.9 million, down 28.1% from $312.8 million in the same period last year. Segment earnings fell to $5.2 million from $86.5 million a year ago, reflecting seasonally weak demand.
Winchester sales, whose products include firearms and ammunition, increased 3.8% to $126.0 million from $121.4 million in the year-earlier quarter, primarily reflecting higher sales volumes. Segment income more than doubled to $9.5 million from $3.3 million a year ago, driven by higher sales and improved costs. Commercial and military sales increased during the quarter which more than offset declines in law enforcement and industrial sales. Military sales increased 22% from last year.
For fiscal year 2009, the company's net income declined to $135.7 million or $1.73 per share from $157.7 million or $2.07 per share last year. Analysts expected the company to earn $0.92 per share for the year.
The results for the year include pretax recoveries of environmental costs incurred and expensed in prior periods of $82.1 million, a $4.6 million pretax reduction in selling and administration expense associated with the favorable resolution of a capital tax matter in Canada, and $4.9 million of pretax gains associated with sales of real estate.
Sales for the year declined to $1.53 billion from $1.76 billion a year ago. Analysts expected revenues of $1.51 billion for the year.
Cash and cash equivalents as at December 31, 2009 were $458.5 million, up from $376.6 million at September 30, 2009. The increase in cash reflects the majority of the proceeds from the third and fourth quarter recoveries of environmental costs incurred and expensed in prior periods, and an $8.7 million decrease in working capital.
On January 22, 2010, Olin's board of directors declared a dividend of $0.20 on each share of Olin common stock. The dividend is payable on March 10, 2010 to shareholders of record at the close of business on February 10, 2010.
Looking ahead to the first quarter of fiscal year 2010, the company forecasts earnings of $0.10 per share. Analysts expect earnings of $0.06 per share for the first quarter.
The company expects chlor alkali segment earnings for the quarter to improve slightly compared to the year-ago period, reflecting some anticipated improvement in demand. Earnings in the Winchester segment are expected to improve from the year-ago period due to seasonally stronger demand and are expected to be similar to levels in the first quarter of 2009.
OLN closed Monday's regular trading session at $16.75, up $0.15 or 0.90% on a volume of 0.90 million shares.
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