W.R. Grace's earnings decline despite 6.8% increase in sales

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

Charges related to its Chapter 11 bankruptcy filing and higher pension and medical costs for employees brought W.R. Grace & Co.'s net earnings down in the third quarter, but sales were up and the company said it is in a strong position from an operating standpoint.

The Columbia chemical maker earned $14 million, or 21 cents per share, in the three months that ended Sept. 30. That compares with a profit of $20 million, or 30 cents a share, in the third quarter last year.

This year's third quarter included a charge of $13 million to cover the estimated costs to resolve environmental lawsuits and an $8.6 million charge related to Chapter 11 expenses.

Sales in the quarter were up 6.8 percent, to $479 million from $448 million. Excluding the favorable impact of currency translations, sales would have been up 4.6 percent.

"The real story at Grace is that business is sound, we are performing well and our profits are holding, but legacy issues and Chapter 11 issues are offsetting that performance," said Robert M. Tarola, Grace's chief financial officer.

Grace, which has slightly more than 1,000 employees in the Baltimore area, filed for Chapter 11 protection in April 2001 after it was overwhelmed by asbestos-related lawsuits.

Prior to 1973, Grace added asbestos to some of its fire-protection products. It also operated a vermiculite mine in Montana for nearly 30 years. Vermiculite, which is used in insulation, fertilizer and potting soil, contains a naturally occurring form of asbestos.

Sales in Grace's Davison Chemicals segment, also based in Columbia, were $248 million, up 10 percent from the year before. The Performance Chemicals division, based in Cambridge, Mass., reported revenue of $231 million, up 3 percent from the prior year.

Shares of Grace closed up 3 cents yesterday at $1.05 on the New York Stock Exchange.

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