Millennium predicts worse 3rd-quarter losses

N.J. chemical maker blames lowered forecast on weak U.S. economy

October 02, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Millennium Chemicals Inc., which idled a large part of its Hawkins Point operation and announced layoffs of 250 workers in June, warned yesterday that third-quarter losses would be greater than expected because of overcapacity and weak demand in a slumping U.S. economy.

The Red Bank, N.J.-based company said its results will be "slightly below the lower end of the range" of analysts' third-quarter expectations. Analysts surveyed by Zacks Investment Research Inc. had expected a loss of 17 cents to 32 cents a share.

In last year's third quarter, Millennium posted a $35 million profit, or 56 cents a share, on sales of $473 million. Shares of Millennium fell 76 cents yesterday in heavy trading in the New York Stock Exchange to close at $9.73.

The company attributed its widening estimated losses primarily to its 29.5 percent stake in Equistar Chemicals LP, which produces ethylene and polyethylene - two chemicals used in making plastics.

Equistar has faced tough conditions in the petrochemicals market all year, said Mickey Foster, Millennium's vice president for corporate and investor relations

"Equistar has already shut down one plant and idled another one [both in Texas]," Foster said. "We continue to look at costs and optimizing our cash flow and our capital spending."

Millennium also expects earnings before interest, taxes, depreciation and amortization to be down in its acetyls segment, which makes chemicals for use in adhesives, paints, and textile and paper coatings, from $10 million last quarter to about half that in the third quarter.

Millennium expects to slash its selling, development and administrative costs by 35 percent in the third quarter compared with the similar period last year - in part a result of the company's drive to cut its global work force of 4,300 people by 10 percent.

The chemical maker also plans to reduce its capital spending, from about $100 million this year to about $70 million next year, Foster said.

Millennium idled a facility at Hawkins Point that makes titanium dioxide using a sulfate process. But another Hawkins Point facility, which uses a cheaper chloride process, continues to make titanium dioxide and employs about 160 workers, said Tim Dowdle, Millennium's senior vice president of manufacturing.

Millennium said it expects its third-quarter earnings from its titanium dioxide and flavor and fragrance chemicals to remain unchanged from previous guidance.

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