W.R. Grace sales increase, but costs eat into profit

Charges send net income down nearly 9 percent

July 24, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

Chemical maker W.R. Grace & Co. said yesterday that sales were up in the second quarter, but costs related to a plant closing and higher pension expense drove the bottom line lower.

Sales rose 5 percent in the three months that ended June 30, from $450 million to $473 million, but one-time charges helped send net income down nearly 9 percent, from $23 million, or 35 cents a share, to $21 million, or 32 cents a share.

The Columbia-based company had a charge of $7.4 million for a plant relocation and higher pension costs as its investments in the equity market lost value.

Grace's bankruptcy proceedings cost the company $8 million in the quarter. That was partly offset by lower interest expenses that saved Grace $7 million.

Grace, which has about 1,100 employees in the Baltimore area, filed for Chapter 11 protection in April last year after it was overwhelmed by asbestos-related lawsuits. Before 1973, Grace added asbestos to some of its fire-protection products. Grace also operated a vermiculite mine in Montana for nearly 30 years. Vermiculite - used in insulation, fertilizer and potting soil - contains a naturally occurring form of asbestos.

Robert M. Tarola, senior vice president and chief financial officer, said that if not for the plant closing and added pension expense, net income would have been about 10 percent higher than in last year's second quarter. "We are pleased with those results," he said.

At the Davison Chemical unit, based in Columbia, sales rose nearly 6 percent in the quarter to $246 million, and operating income was up 7 percent to $39.5 million.

The Performance Chemicals division, based in Cambridge, Mass., had sales of $227 million, up 4.5 percent. Its operating income of 29 million was down 4 percent, largely because of the costs associated with closing a plant in Atlanta whose functions were moved to a Chicago plant.

Shares of Grace closed down 12 cents yesterday at $2.27. Earnings were announced after market close.

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