Cabot Announces Third Quarter Operating Results
EPS $0.62 versus ($0.09) in prior year
BOSTON, MA (July 26, 2004) - Cabot Corporation (CBT/NYSE) today announced earnings of $42 million ($0.62 per diluted common share) for the third quarter ended June 30, 2004, compared with a loss of $5 million ($0.09 per diluted common share) for the year ago quarter. There was no impact on results from after tax charges from certain items and discontinued operations in the third quarter ended June 30, 2004, in contrast to $34 million of after tax charges ($0.57 per diluted common share) for the year ago quarter. Details concerning charges from certain items and discontinued operations, which are not included in the business segment results discussed later in this release, are included in Exhibit I to this press release.
Kennett F. Burnes, Cabot's Chairman and CEO, said, "We are pleased to report strong performance in our core businesses as well as continued progress in our inkjet and cesium formate businesses during the quarter. The company benefited from increasing demand across all markets and regions, as well as continued cost improvements resulting from our "excellence" initiative which we began implementing last year to improve our overall operating performance."
Chemical Business - For the quarter ended June 30, 2004, the Chemical Business segment had 12% volume growth and reported a 50% increase in year over year segment profit, from $30 million in the third quarter of fiscal year 2003 to $45 million in the third quarter of fiscal year 2004. Within the Chemical Business segment, carbon black's profit was $10 million higher than the same quarter last year. This improvement resulted from stronger volumes, lower operating costs resulting from the "excellence" initiative, and positive currency translation of foreign earnings, offset partially by a decline in variable margins. The sequential quarter profit improvement of $3 million was due primarily to stronger demand. During the quarter the carbon black business also entered into an additional long-term carbon black supply agreement with an existing major tire customer that expands the geographic scope of its contracted supply arrangements with that customer.
In the third quarter, profits in Cabot's fumed metal oxides business were $3 million higher than the same quarter last year due mainly to volume growth and the favorable cost impact of the "excellence" initiative. Sequentially, although volumes remained strong, profits were $2 million lower primarily due to timing of certain operating costs.
During the third quarter, the inkjet colorants business continued to deliver strong growth in the OEM and after-market segments. Sales volumes for this business were 39% higher in the third quarter of fiscal 2004 than in the same quarter last year, and 6% higher sequentially. The inkjet business is solidly profitable, with profits doubling compared to the third quarter of fiscal 2003 and increasing 32% sequentially.
Supermetals Business - In the third quarter of fiscal 2004, the Cabot Supermetals Business earned $18 million of segment profit reflecting higher tantalum powder volume and lower operating costs, offset in part by unfavorable currency translation of foreign earnings. This strong performance represents a $4 million increase in segment profit compared to the same period of 2003, which had benefited from $15 million of profit from contracted intermediate product sales that ended at the end of that year. Sequentially, segment profit was $2 million more than the second quarter of 2004 mainly due to higher volumes and lower operating costs.
Specialty Fluids Business - In the third quarter of fiscal 2004, Cabot Specialty Fluids was active on five jobs. Although some revenue from these jobs was recognized this quarter, the majority will be recognized when the jobs are completed, which is expected to occur in the fourth quarter. Segment profit was $1 million more than in the third quarter of 2003 due to the increased activity. Sequentially, segment profit was $3 million less than the prior quarter due primarily to the timing of the completion of jobs.
With respect to the future, Burnes said, "We have benefited from the strengthening economy and are cautiously optimistic about continued strong performance in our core businesses, despite some seasonal decline in the carbon black business. In addition, we expect further cost savings from our "excellence" program and increasingly favorable results from our inkjet and cesium formate businesses."
For those interested in more detailed information on Cabot's Third Quarter 2004 results, please see the Supplemental Business Information available today on the Company's website in the Investor Relations section: http://cabot-corp.com.
Cabot Corporation is a global specialty chemicals and materials company headquartered in Boston, MA. Cabot's major products are carbon black, fumed silica, inkjet colorants, capacitor materials, and cesium formate drilling fluids.
Forward-Looking Information: Included above are forward-looking statements relating to management's expectations regarding future profits, new business growth, the Company's product development program and the possible achievement of the Company's financial goals. Actual results may differ materially from the results anticipated in the forward-looking statements included in this press release due to a variety of factors, including domestic and global economic conditions, such as market supply and demand, prices and costs and availability of raw materials; fluctuations in currency exchange rates; patent rights of others; stock market conditions; the timely commercialization of products under development by the Company (which may be disrupted or delayed by technical difficulties, market acceptance, competitors' new products, as well as difficulties in moving from the experimental stage to the production stage); the Company's ability to successfully manage acquisitions; demand for our customers' products; competitors' reactions to market conditions; the accuracy of the assumptions used by the Company in establishing a reserve for its share of liability for respirator claims; and the outcome of pending litigation and governmental investigations. Other factors and risks are discussed in the Company's 2003 Annual Report on Form 10-K.
To access a copy of the Supplemental Business Information for this quarter please Click here.