Fourth-quarter report to beat predictions, W.R. Grace says

Better productivity, sale of unit add profit


January 22, 2000|By June Arney | June Arney,SUN STAFF

W. R. Grace & Co., a Columbia-based supplier of chemicals and building materials, said yesterday that fourth-quarter earnings are likely to exceed expectations by as much as 25 percent on rising sales of chemicals used in construction and other industries.

The company said it anticipates per share earnings of between 60 cents and 66 cents, exceeding analysts' estimates. That includes a 16-cent, one-time gain associated with a unit the company sold. Even without that gain, per share earnings of between 44 and 50 cents would beat the 40-cent average estimate of analysts polled by First Call/Thomson Financial.

The company's earnings were helped by a 2.5 percent increase in sales over the comparable period in 1998 and improvements in productivity, Grace executives said.

Grace will officially release its earnings after the close of trading Jan. 31.

"Since the new management has come aboard, the strategy of the company has been completely changed," said Fred H. Siemer, an analyst with F. H. Siemer & Co. Inc. in Highland, N.Y. "They're going to begin to build the company, looking for new products in the construction and catalyst area."

Paul J. Norris arrived as president and chief executive officer in November 1998, then became chairman last January, with the goal of building Grace into an integrated operating chemical company with revenue exceeding $2 billion by 2001.

"This is the fourth straight quarter of double-digit earnings growth since Norris took over," said Robert M. Tarola, senior vice president and chief financial officer.

Grace also said that a settlement with the federal government regarding practices of the company's former medical care unit -- Fresenius Medical Care -- is not expected to have any financial impact on Grace.

The company also announced that the establishment of a health care program for Libby, Mont., residents is not expected to have a material impact on its reserves for asbestos-related litigation.

"We wanted to make sure that the market understood what that meant to us financially," Tarola said.

Grace, a leading global supplier of catalysts and silica products, specialty construction chemicals and building materials and container products, has annual sales of about $1.5 billion, with 6,600 employees and operations in 40 countries. Grace shares rose 37.5 cents yesterday, closing at $12.375.

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