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C&D Feels Steel Cost Hit

The company expects losses to continue through fiscal 2007.
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C&D Technologies

(CHP)

said Tuesday the company expects heavier losses than it previously expected in its third quarter.

The Blue Bell, Pa., maker of electrical power storage and conversion products expects the losses to continue at least through the end of its current fiscal year, Jan. 31, 2007.

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Shares of the small-cap company were lower by $1.17, or 17.8%, to $5.39 in recent trading Tuesday.

During its second-quarter earnings conference call, C&D indicated that it expected to return to profitability in the fourth quarter of fiscal 2007, but it's now revising that outlook due to rising lead costs as well as softness in certain end markets for its power electronics division. In response to these conditions, C&D recently increased the prices for its lead-containing products and is accelerating its cost-reduction actions.

"We have seen nearly a 30% increase in the price of lead, the primary raw material for both our Standby Power and Motive Power businesses, during the third quarter alone," said CEO Jeffrey Graves in a company statement. "While we have taken pricing actions to counteract these cost pressures, and are evaluating further pricing actions, we do not expect to see any positive impact until after the current pricing actions take effect later in our fourth quarter."

In a move that's expected to result in $5 million of annualized costs savings, the company is closing its facility in Portland and will move those operations into its Toronto and Mansfield, Mass., operations.

C&D will provide additional details on its year-end outlook and cost-reduction plans during its third-quarter conference call in December. "We are confident that our turnaround plan for C&D Technologies is on target, even if our return to profitability has now been delayed," Graves said.