W.R. Grace reports 1Q profit decline of 3.7 percent

Bankruptcy-related hearing to be held in June

April 26, 2011|By Hanah Cho, The Baltimore Sun

Chemical maker W.R. Grace & Co., which is close to emerging from bankruptcy, reported Tuesday a 3.7 percent decline in first-quarter profit, but its earnings beat Wall Street expectations.

Shares gained 8.8 percent, or $3.63, to close Tuesday at $44.88 on the news. The stock traded as much as 10 percent higher during the day.

Separately, the Columbia-based company said a hearing will be held June 28 at U.S. District Court in Delaware for appeals to Grace's reorganization plan. In late January, a federal bankruptcy judge confirmed the reorganization plan, which also needs to be approved by the District Court.

Grace filed for Chapter 11 protection in 2001, largely due to asbestos-related lawsuits against the company.

"We are confident that this District Court will affirm all the findings and rulings" made by the bankruptcy court, said Grace's chairman and chief executive officer, Fred Festa, during a conference call Tuesday with analysts. "We're working to emerge as soon as possible."

Net income for the three months ending March 31 was $54.2 million, or 72 cents per share, compared with $56.3 million, or 76 cents per share, in the previous year. The company said earnings were higher last year because of an income tax benefit.

Analysts polled by Bloomberg expected 54 cents per share.

Sales were up 13.1 percent to $695.7 million, compared with $614.9 million last year, boosted by increasing revenue in the company's specialty chemicals and materials division and in emerging markets.

Sales in Asia, the Middle East and Latin America represented 32 percent of the company's total sales in the first quarter.

"We feel good about the quarter and the good start to the year," Bill Corcoran, Grace's vice president of public and regulatory affairs, said in an interview.

Grace is well-positioned to take advantage of the growth in the emerging markets, as the countries have invested in their infrastructures, Corcoran said.

Grace's Middle East operations are not based in any of the Arab nations experiencing unrest.

But Grace's operations in Japan were affected by the earthquake in March, which has had a "modest" impact on the company, Corcoran said.

The natural disaster damaged a facility in Sendai, but the plant was operational two weeks later, he said.

A second plant, in Atsugi, suffered no damage, Corcoran said. Grace's 70 employees in Japan were not affected, he added.


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