Rohm and Haas: 1Q earnings drop

April 22, 2008 5:11:34 AM PDT
Specialty chemicals maker Rohm and Haas Co. on Monday reported a 10 percent drop in first-quarter earnings despite an uptick in sales as higher costs eroded profits.

The Philadelphia-based company, a pre-World War I business with products ranging from plastics additives to table salt, posted a net income of $172 million, or 87 cents per share, in the quarter. In the same quarter in 2007, Rohm and Haas earned $192 million, or 87 cents per share.

Sales rose by 16 percent to $2.51 billion, driven by strong results in electronic technologies and salt. The company said business in fast-growing developing countries offset a weaker U.S. market, and results were also boosted by acquisitions, price increases and a weak dollar.

Excluding restructuring and other one-time charges, profits came to 91 cents per share. Analysts polled by Thomson Financial were expecting profits of 89 cents per share on revenue of $2.38 billion.

Rohm and Haas's chief executive, Raj Gupta, said in a statement that the company remains focused on the long-term as it maneuvers through the "turbulent" environment.

The company's core chemicals business saw sales increase by 9 percent to $1.26 billion.

But profits before taxes for the group fell 12 percent to $136 million due to higher costs for raw materials, energy and freight. A slump in U.S. building and construction - the company makes paint and coatings materials - and softening of business in Western Europe also contributed to the decline.

Salt sales rose by 26 percent to $411 million and pretax profits were up 43 percent to $67 million. Rohm and Haas owns Morton Salt and also sells salt for de-icing roads.

Electronics materials sales were up 36 percent to $525 million, helped by acquisitions. Profits before taxes rose 3 percent to $90 million.

The performance materials unit, which sells powder coatings and biocides, had a 7 percent sales increase to $310 million in the quarter. Pretax profits rose 43 percent to $40 million.

Sales in the Asia-Pacific region increased by 39 percent, while sales in Latin America went up 29 percent. Sales in North America, as well as in Europe, the Middle East and Africa, were up 10 percent.

Sales increased 42 percent in rapidly developing economies in Latin America, central and eastern Europe, Turkey and in Asia excluding Japan, Australia and New Zealand.

Corporate expenses doubled to $100 million, mainly due to borrowings to buy back company stock and restructuring and other costs.

Selling and administrative expenses rose by 12 percent to $292 million, in part due to acquisitions. Research and development costs also rose, by 16 percent, to $79 million.

Looking ahead, Rohm and Haas reaffirmed its $10 billion sales outlook for 2008 and earnings of $3.80 to $4 per share, excluding restructuring costs and other one-time items. Analysts were expecting $9.75 billion in sales and profits of $3.87 per share.