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Higher urethane sales at Crompton—but restructuring costs hit profits

By Liz White, UT contributing editorMiddlebury, Connecticut-Crompton Corp. saw its urethanes sales rise 14 percent in the third quarter, as a result of “higher unit volume and favorable foreign currency translation.” Total polymer sales-for urethanes and EPDM-were $81.9 million for the period, a 10 percent surge from the previous years’ third quarter. Crompton said the rise was a result of a seven percent increase in selling prices, favourable foreign currency translation of two percent and higher unit volume of one percent.Operating profit for Crompton’s polymer division was $13.5 million, a rise of $7.1 million from the prior year. Crompton said in its results statement that this increase largely came from better pricing, lower costs and higher urethanes unit volume-“offset in part by higher raw material and energy costs.”In additives for urethanes, favourable foreign currency translation and improved pricing contributed to a sales rise of 5 percent, the group said. In total, the group’s polymer additives sales for the quarter were $366.2 million, a rise of 18 percent from the prior year-with a five percent contribution from the acquisition of GE Specialty Chemicals on 31 July 2003. Despite these encouraging figures, Crompton as a whole made a net third-quarter loss of $40.7 million, compared to net earnings of $80.2 million in the third quarter of 2003. Crompton said these losses came from charges associated with restructuring, including pre-tax charges for facility closures, severance costs of $40.4 million, a $20.1 million loss in connection with refinancing; and executive retirement costs of $1.7 million.The group also paid out antitrust costs of $8.4 million and a $3.0 million product liability charge. At $639.4 million, Crompton’s third quarter net sales were 14 percent above those for Q3 2003, from higher selling prices, better volumes, the GE Specialty Chemicals acquisition and favorable foreign currency translation.”Our determined pricing efforts resulted in price increases that more than offset higher raw material and energy costs in the third quarter,” said Bob Wood, chairman, president and ceo of Crompton. Wood also stressed that Cropmton is “making excellent progress on the organisational redesign we announced in July. … Going forward, we will have a leaner, more efficient organisation and will benefit from cost reductions of $50 million annually beginning in 2005.”

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