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General Cable Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: BGC

On Slide #6, we have provided commentary explaining our second quarter results compared to the first quarter of 2012. The increase in global unit volume of 2% sequentially, relatively stable pricing in North America and ROW and a favorable geographic mix in Europe helped to lift the top line more than 3% sequentially despite the impact of declining metal prices. In Europe, stronger demand for electric utility cables in France and the Mediterranean partially replaced the significant volume at very weak pricing levels reported in Spain during the first quarter.

Gross profit and adjusted operating income performance in the second quarter principally reflect the improved performance of the company's telephone and electric utility businesses in North America, strong global aerial transmission project activity, improving domestic conditions in Thailand, mining activity in Chile and ongoing grid investment in France.

Other expense for the second quarter of $13.5 million reflects the impact of $10.2 million of mark-to-market accounting losses on economic hedges, which are used to manage currency and commodity risk on our project businesses globally, and $3.3 million of transactional currency losses. Given the numerous currencies in which we transact business around the world and the currency volatility experienced during second quarter, we are pleased with the effectiveness of our hedging program as we reported foreign currency transactional losses consistent with historical norms during the quarter.

On the next 3 pages, Slide 7, 8 and 9, we have provided segment information for your reference. First in North America, excluding metal pounds attributable to our telephone and electric utility businesses, volume was up 1% sequentially as industrial and networking demand improved marginally compared to the first quarter. Specialty cables, particularly those used in natural resource extraction, continue to be a source of stability.

Year-over-year, excluding metal pounds attributable to our telephone and electric utility businesses, volume was up 4%, as stronger demand for industrial and specialty cables more than offset weaker demand in the company's other North American businesses. Sequentially, second quarter operating income of $38.7 million improved, principally due to the strong performance of the company's telephone and electric utility [indiscernible] specialty cables businesses.

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