2011 Fourth-Quarter Results
Net sales for the three months ended December 31, 2011, were $443 million, a decline of 18 percent from net sales of $537 million in the fourth quarter of 2010. Reduced sales of electronic materials products, including precious metal sales, were the primary driver of the decline in consolidated net sales. Excluding the Electronic Materials segment, sales increased by 2.4 percent. Reduced customer demand for conductive pastes used in solar cell applications and
metal powders used in a variety of electronic products resulted in a $103 million decline in sales for the Electronic Materials segment, including a $65 million decline in sales of precious metals due to reduced volume and lower silver prices. Demand for conductive pastes remains weak due to low end-market demand and excess inventory of completed solar power modules, particularly in the European solar market. Sales increased in the Performance Coatings, Polymer Additives, Specialty Plastics and Pharmaceuticals segments compared with the prior-year quarter, while sales declined in the Color and Glass Performance Materials segment.
Gross profit was $75 million, or 16.9 percent of net sales, during the 2011 fourth quarter, compared with $109 million, or 20.3 percent of net sales, during the fourth quarter of 2010. Excluding special charges, gross profit was 19.3 percent of sales excluding precious metals during the quarter, compared with 26.8 percent in the fourth quarter of 2010. The primary driver of the decline in gross profit dollars was the reduced sales volume in our Electronic Materials segment, including conductive pastes sold to manufacturers of solar cells. Electronic materials are among the Company’s highest margin products. During the 2011 fourth quarter, gross profit was reduced by charges of $1.1 million, primarily related to residual costs at closed manufacturing sites that were affected by prior-period restructuring actions. In the fourth quarter of 2010, gross profit was reduced by charges of $4.1 million, primarily as a result of a multi-year settlement of taxes owed on certain raw materials purchases and costs related to manufacturing rationalization activities.
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