Ferro Corporation (“The Company,” NYSE: FOE) announced today that it has sold assets related to its solar pastes business to Heraeus, a privately owned global precious metals and technology company based in Hanau, Germany. As announced on October 9, 2012, the Company had decided to explore strategic options for the solar pastes business in an effort to eliminate the negative impact from the business on earnings and cash flow. The market for conductive pastes used in the manufacture of solar cells has declined substantially since 2011 as the solar power panel industry has struggled with overcapacity and falling prices. As a result of the transaction, the Company will eliminate operating losses associated with the solar business. Terms of the transaction were not disclosed.
“The solar pastes transaction will advance our efforts to drive shareholder value,” said Peter T. Thomas, Interim President and Chief Executive Officer. “It will eliminate approximately $17 million of negative drag on operating earnings from the solar pastes business, allowing higher returns on invested capital and freeing up capital for investment in our core businesses. It also will eliminate a source of volatility in our business, allowing management to drive more consistent and predictable earnings. In addition, this transaction enables the Company to reduce debt by approximately $11 million and precious metal consignment arrangements by approximately $12 million.”
Since assuming his current position with the Company on November 12, 2012, Mr. Thomas has accelerated and expanded initiatives to drive efficiencies across the global enterprise. He commented, “We have substantial restructuring experience, including in Europe, and we are using that experience to create value for our shareholders. In addition to the savings from the solar pastes divestiture, we expect our cost savings initiatives to generate annual savings of $25 million to $30 million in 2013 and more than $50 million in 2014. Our focus on operating efficiency will be relentless and we are planning even greater cost savings in 2015.” Total costs over the 2013–2014 period associated with these initiatives are expected to be in excess of $50 million. Restructuring actions at certain sites are subject to required consultations with employee representatives and other local legal requirements.