Rohm & Haas issues upbeat outlook

By siliconindia   |   Wednesday, 26 March 2003, 08:00 Hrs
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PHILADELPHIA: Rohm and Haas (NYSE:ROH) said today that sales for the first quarter are expected to be 13 to 15 percent higher than the same period in 2002, with all six business groups showing favorable year-on-year comparisons.

Drivers for the revenue improvement include currencies, acquisitions and continued demand in many key markets, the company claimed.

"While currencies and acquisitions are having a positive impact on this quarter's revenues, the ability to show sales growth in these very difficult economic times is a reflection of the strength of our portfolio and products," said Raj Gupta, chairman and chief executive officer.

The revenue improvement is attributable to strong demand in many consumer driven markets, particularly the architectural coatings, electronics, and personal care markets. Sales from the acquisitions, in 2002, of the Ferro European Powder Coatings business and the Kureha Plastics Additives business also are contributing to the improved year-over-year sales comparisons. Salt sales should be up considerably over the same period in 2002, primarily on the strength of the ice-control market, with the business experiencing record February ice-control sales.

Net earnings for the first quarter are expected to be in the range of $.34 to $.37 per share, similar to the first quarter, 2002 earnings of $.36 per share, excluding cumulative effect of accounting changes in both periods.

The company's costs in the quarter will be significantly impacted by the rapidly escalating raw material and energy costs. The gap between raw material increases and selling prices, compared to the fourth quarter of 2001, is expected to be approximately $40 million, as raw materials are rising faster than the company's ability to implement price increases and energy surcharges. Other major costs include the accelerated depreciation related to the previously announced exiting of isothiazoline production at the company's Bayport, Texas plant, as well as higher pension, insurance and health care costs, which are partly being offset by solid internal control over discretionary spending.

"It is an understatement to say that these are difficult times for this industry," said Gupta. "A tough economic environment and anxiety over global events are significant. In the last two weeks, we are seeing some slowing of demand in North America, undoubtedly attributable in part to the anxiety and uncertainty over these geo-political events. However, our ability to demonstrate solid sales growth in all our business groups, along with an earnings performance similar to the same period a year ago, is a reflection of the leverage from the cost control initiatives implemented since mid-2001, and a tribute to the efforts of our employees to achieve pricing to help offset the raw material increases, while maintaining good control of discretionary spending."

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