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Carbide Q1 Profits Rise, Beat Forecasts
Reuters, Wednesday April 26, 11:46 am Eastern Time
DANBURY, Connecticut, April 26 - Chemical producer Union Carbide Corporation (NYSE:UK - news) said Wednesday its first-quarter earnings were more than 25% higher than year-ago figures as it was able to raise prices enough to partly offset higher oil costs.
Union Carbide beat both Wall Street's expectations and year-earlier results, earning $97 million, or 71 cents per diluted share, in the quarter. In the 1999 quarter it earned $77 million, or 56 cents a share.
The consensus analysts' estimate from a poll conducted by FirstCall/Thomson Financial was 69 cents a share. The results exclude effects of an accounting change.
While the company was able to raise some prices for its chemicals and plastics, it said, it still was hurt by rising costs for oil, a key raw material in the business. Crude oil prices averaged about $28.50 in the quarter, compared with just over $13 a barrel in the same period last year.
On Tuesday, DuPont Co. (NYSE:DD - news), the No.1 U.S. chemical company, also reported stronger earnings, but it too was hampered by the costs of energy-related feedstocks.
Meanwhile, Dow Chemical Co. (NYSE:DOW - news) and Union Carbide are moving toward completion of a merger that will heat up competition between the industry's top companies. The deal is expected to close in the second quarter, and will make the combination second only to DuPont in worldwide sales.
At the time Dow's takeover of Union Carbide was unveiled last August, the companies said they expected savings of $250 million in the first year of the combination, and $500 million by the second year.
Union Carbide will issue a full earnings report on May 1, while Dow is expected to report first-quarter earnings on Thursday.
In a preview to its earnings report late last month, Union Carbide said that its profits would be similar to the 68 cents it earned in the fourth-quarter, prompting analysts to raise estimates from the 54 cents they were forecasting at the time.
While its actual number surpassed its fourth-quarter earnings, shares of the chemical company still fell 1-1/4 to 54-15/16 in early trade on the New York Stock Exchange.
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