Koppers Holdings Q2 Profit Down 89%, Results Miss View

(RTTNews) - Koppers Holdings Inc. (KOP), a producer of carbon compounds and treated wood products, on Thursday reported an 89 percent plunge in profit for the second quarter from last year, reflecting lower revenues and product pricing in addition to higher expenses.

Both revenue and adjusted earnings per share for the quarter missed analysts' estimates. However, the company said it expects overall sales and adjusted operating profit for the second half of the year to be higher.

Walt Turner, president and CEO of Koppers, said, "We continue to operate against industry headwinds and remain challenged in our global CMC business due to lower demand in certain regions, which resulted in reduced sales prices and volumes compared to the prior year."

The company noted that the latest quarter's results were negatively impacted by lower product pricing, coupled with integration, plant outages, consulting, and plant startup costs.

The Pittsburgh, Pennsylvania-based company's net income for the second quarter was $1.6 million or $0.08 per share, down from $14.4 million or $0.69 per share in the prior-year quarter.

The latest quarter's results included $6.7 million of pre-tax charges related to impairment and plant closure costs.

Adjusted net income for the latest quarter was $8.1 million or $0.39 per share, compared to $14.7 million or $0.70 per share in the year-ago period. On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.61 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated net sales for the quarter declined 4 percent to $356.8 million from $370.9 million in the same period last year. Analysts had a consensus revenue estimate of $391.27 million for the quarter.

The decline in sales was driven predominately by lower sales volumes for railroad crossties due to lower raw material availability, in addition to lower sales volumes and prices for carbon pitch.

Sales for Carbon Materials and Chemicals or CMC declined 5 percent from last year to $208.6 million, while sales for Railroad and Utility Products and Services or RUPS decreased 2 percent to $148.2 million.

The company's selling, general and administrative expenses for the quarter increased 35 percent from last year to $21.9 million.

Looking ahead, Turner said, "For the second half of the year, we expect overall sales and adjusted operating profit to be higher as we continue to align our strategy and footprint in the current operating environment, including driving costs out of the business and capitalizing on a strengthening European economy."

KOP is trading at $37.32, up $0.80 or 2.19 percent on a volume of 70,434 shares.