Kronos Worldwide Inc. (KRO, Financial) filed Quarterly Report for the period ended 2010-06-30.
Kronos Worldwide Inc. has a market cap of $1.37 billion; its shares were traded at around $27.9 with and P/S ratio of 1.2.
Income (loss) from operations β Income (loss) from operations increased by $60.7 million from an operating loss of $21.9 million in the second quarter of 2009 to an operating income of $38.8 million in the second quarter of 2010. Income (loss) from operations as a percentage of net sales increased to 10% in the second quarter of 2010 from (8)% in the same period for 2009. This increase is driven by the improvement in gross margin, which increased to 22% for the second quarter of 2010 compared to 5% for the second quarter of 2009. Our gross margin has increased primarily because of higher sales volumes, higher selling prices and lower manufacturing costs per ton resulting from higher production volumes. However, changes in currency exchange rates have negatively affected our gross margin and income (loss) from operations. We estimate that changes in currency exchange rates decreased income (loss) from operations by approximately $12 million in the second quarter of 2010 as compared to the same period in 2009.
Interest expense β Interest expense decreased $.6 million from $10.3 million in the second quarter of 2009 to $9.7 million in the second quarter of 2010 due to decreased average borrowings under our revolving credit facilities which offset the effect of higher interest rates on our European credit facility. The interest expense we recognize will vary with fluctuations in the euro exchange rate.
Net sales β Net sales increased 32% or $169.7 million compared to the six months ended June 30, 2009 primarily due to a 28% increase in sales volumes along with a 3% increase in average TiO2 selling prices and the positive impact of currency exchange rates. We estimate the favorable effect of changes in currency exchange rates increased our net sales by approximately $4 million, or 1%, as compared to the same period in 2009. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand. We currently expect average selling prices in the second half of 2010 to be higher than the average selling prices in the first six months of 2010.
Cost of sales - Cost of sales increased $42.3 million or 8% in the six months ended June 30, 2010 compared to the same period in 2009 due to the net impact of a 28% increase in sales volumes, a 71% increase in TiO2 production volumes, lower raw material costs of $7.4 million, lower utility costs of $11.7 million and an increase in maintenance costs of $10.9 million. In addition, cost of sales in the first six months of 2010 was negatively impacted by approximately $8 million as a result of higher production costs in 2010 at our ilmenite mines in Norway. Cost of sales as a percentage of net sales decreased to 79% in the first six months of 2010 compared to 96% in the same period 2009 primarily due to the significantly higher production volumes in 2010, as we implemented temporary plant curtailments during the first half of 2009 in order to reduce our finished goods inventories to an appropriate level and due to higher selling prices in 2010. Such temporary plant curtailments resulted in approximately $80 million of unabsorbed fixed production costs which were charged directly to cost of sales in the first six months of 2009.
Income (loss) from operations β Income (loss) from operations increased by $108.7 million from an operating loss of $48.2 milli
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Kronos Worldwide Inc. has a market cap of $1.37 billion; its shares were traded at around $27.9 with and P/S ratio of 1.2.
Highlight of Business Operations:
Cost of sales - Cost of sales increased $27 million or 10% in the second quarter of 2010 compared to 2009 due to the net impact of a 30% increase in sales volumes, a 54% increase in TiO2 production volumes, lower utility costs of $2.3 million and an increase in maintenance costs of $6.2 million. In addition, cost of sales in the second quarter of 2010 was negatively impacted by approximately $4 million as a result of higher production costs in 2010 at our ilmenite mines in Norway. Cost of sales as a percentage of net sales decreased to 78% in the second quarter of 2010 compared to 95% in the second quarter of 2009 primarily due to the significantly higher production volumes in 2010, as we implemented temporary plant curtailments during the first half of 2009 in order to reduce our finished goods inventories to an appropriate level and due to higher selling prices in the second quarter of 2010. Such temporary plant curtailments resulted in approximately $30 million of unabsorbed fixed production costs which were charged directly to cost of sales in the second quarter of 2009.Income (loss) from operations β Income (loss) from operations increased by $60.7 million from an operating loss of $21.9 million in the second quarter of 2009 to an operating income of $38.8 million in the second quarter of 2010. Income (loss) from operations as a percentage of net sales increased to 10% in the second quarter of 2010 from (8)% in the same period for 2009. This increase is driven by the improvement in gross margin, which increased to 22% for the second quarter of 2010 compared to 5% for the second quarter of 2009. Our gross margin has increased primarily because of higher sales volumes, higher selling prices and lower manufacturing costs per ton resulting from higher production volumes. However, changes in currency exchange rates have negatively affected our gross margin and income (loss) from operations. We estimate that changes in currency exchange rates decreased income (loss) from operations by approximately $12 million in the second quarter of 2010 as compared to the same period in 2009.
Interest expense β Interest expense decreased $.6 million from $10.3 million in the second quarter of 2009 to $9.7 million in the second quarter of 2010 due to decreased average borrowings under our revolving credit facilities which offset the effect of higher interest rates on our European credit facility. The interest expense we recognize will vary with fluctuations in the euro exchange rate.
Net sales β Net sales increased 32% or $169.7 million compared to the six months ended June 30, 2009 primarily due to a 28% increase in sales volumes along with a 3% increase in average TiO2 selling prices and the positive impact of currency exchange rates. We estimate the favorable effect of changes in currency exchange rates increased our net sales by approximately $4 million, or 1%, as compared to the same period in 2009. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand. We currently expect average selling prices in the second half of 2010 to be higher than the average selling prices in the first six months of 2010.
Cost of sales - Cost of sales increased $42.3 million or 8% in the six months ended June 30, 2010 compared to the same period in 2009 due to the net impact of a 28% increase in sales volumes, a 71% increase in TiO2 production volumes, lower raw material costs of $7.4 million, lower utility costs of $11.7 million and an increase in maintenance costs of $10.9 million. In addition, cost of sales in the first six months of 2010 was negatively impacted by approximately $8 million as a result of higher production costs in 2010 at our ilmenite mines in Norway. Cost of sales as a percentage of net sales decreased to 79% in the first six months of 2010 compared to 96% in the same period 2009 primarily due to the significantly higher production volumes in 2010, as we implemented temporary plant curtailments during the first half of 2009 in order to reduce our finished goods inventories to an appropriate level and due to higher selling prices in 2010. Such temporary plant curtailments resulted in approximately $80 million of unabsorbed fixed production costs which were charged directly to cost of sales in the first six months of 2009.
Income (loss) from operations β Income (loss) from operations increased by $108.7 million from an operating loss of $48.2 milli
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