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GrafTech International Ltd. Reports Operating Results (10-Q)

July 26, 2012 | About:
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10qk

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GrafTech International Ltd. (GTI) filed Quarterly Report for the period ended 2012-06-30.

Graftech International Ltd has a market cap of $1.36 billion; its shares were traded at around $10.72 with a P/E ratio of 10 and P/S ratio of 1. Graftech International Ltd had an annual average earning growth of 0.8% over the past 10 years.

Highlight of Business Operations:

Net sales. Net sales for our Industrial Materials segment decreased to $262.3 million in the three months ended June 30, 2012 from $269.8 million in the three months ended June 30, 2011. This decrease was primarily the result of lower sales volumes for graphite electrodes. This impact was particularly evident for our European markets in response to recessionary conditions in the region. These volume decreases were offset by higher realized prices in the three months ended June 30, 2012 compared to the three months ended June 30, 2011. The weighted average selling price, excluding currency impact, of electrodes in the three months ended June 30, 2012 increased approximately 13% compared to the average price in the three months ended June 30, 2011.

Cost of sales. For the three months ended June 30, 2012, we experienced decreases in cost of sales of $13.8 million primarily driven by lower sales volumes in our Industrial Materials segment. Cost of sales in the three months ended June 30, 2012, benefited from lower costs as we consumed remaining year-end inventories. That inventory carried lower raw material costs and overhead absorption rates. We anticipate that the impact of 2012 raw material cost increases will be more fully reflected in the second half of the year. Costs were also $1.8 million lower due to inventory step-up costs recognized in the three months ended June 30, 2011 that did not recur in the three months ended June 30, 2012. These costs related to acquisitions made in 2010. Our Industrial Materials segment was further impacted by changes in foreign currency, which decreased costs by an additional $10.3 million.

Segment operating costs and expenses as a percentage of sales for Industrial Materials decreased to 84% for the three months ended June 30, 2012, compared to 88% for the three months ended June 30, 2011, due to favorable foreign currency impacts, which largely overshadowed modest increases in raw material prices. Total operating costs and expenses decreased $17.2 million from the three months ended June 30, 2012 as compared to the three months

Cost of sales. For the six months ended June 30, 2012, we experienced decreases in cost of sales of $73.0 million as a result of lower sales volumes in our Industrial Materials segment. Cost of sales in the six months ended June 30, 2012, benefited from lower costs as we consumed remaining year-end inventories. That inventory carried lower raw material costs and overhead absorption rates. We anticipate that the impact of 2012 raw material cost increases will be more fully reflected in the second half of the year. Costs were also $4.7 million lower due to inventory step-up costs recognized in the six months ended June 30, 2011 related to the acquisitions made in 2010 that did not recur in the six months ended June 30, 2012. Our Industrial Materials segment was further impacted by changes in foreign currency, which decreased costs by an additional $11.8 million. These decreases in costs were partially offset by severance charges of $3.3 million incurred in the six months ended June 30, 2012 as we took actions to right-size our operations to better align with expected customer demand during the remainder of 2012.

Segment operating costs and expenses as a percentage of sales for Industrial Materials decreased to 85% for the six months ended June 30, 2012, compared to 88% for the six months ended June 30, 2011 due to favorable foreign currency impacts, which largely overshadowed modest increases in raw material prices. Total operating costs and expenses decreased $78.5 million from the six months ended June 30, 2012 as compared to the six months ended June 30, 2011, primarily due to lower sales volumes for graphite electrodes.

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10qk
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