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Harsco Profits Sink On Weak Construction Market

The Associated Press

HARRISBURG (AP) — Industrial service provider Harsco Corp. reported a steep drop in profit for the first quarter Thursday as the global financial crisis continued to erode construction projects and push steel production to historic lows.

Citing those difficulties, along with unfavorable currency exchange rates, the company slashed its full-year earnings guidance, sending shares lower in afternoon trading.

The company reported a first-quarter profit of $18.6 million, or 25 cents per share, down from $57 million, or 67 cents per share, in the same period last year. Revenue sank to $697 million from $988 million.

Analysts polled by Thomson Reuters were looking for 19 cents per share on revenue of $786 million.

The company said the strengthening dollar lowered income by $14 million, or 13 cents per share, during the period.

Based on difficult headwinds facing the company, management lowered its 2009 earnings guidance to between $1.90 and $2.10 per share, compared with a range between $2.80 and $3.

Chief Executive Salvatore Fazzolari said the reduction was necessary in light of the exchange rates, unprecedented weakness in the steel market and the credit freeze.

"It is difficult to see any short-term improvement in these drivers of our business," said Fazzolari. "It now appears that the entire year will be extremely challenging."

Fazzolari said the company will try and increase its cost-saving measures for the year to $100 million from $50 million.

For the second quarter the company expects earnings per share between 40 cents and 50 cents. That is well below the 58 cents per share expected by analysts polled by Thomson Reuters.

Harsco's shares fell 69 cents, or 2.6 percent, to $26.14 in afternoon trading.