Georgia Gulf Reports First Quarter 2011 Financial Results; Building Products Segment Still Face ChallengesMay 6th, 2011 by DWM Magazine
Georgia Gulf Corp. announced financial results this week for its first quarter ended March 31, 2011. In the Building Products segment, net sales were $157.5 million for the first quarter of 2011, three percent higher than the $153.1 million recorded during the same quarter in the prior year.
The recently acquired Exterior Portfolio business contributed $12.4 million of sales from February 9, 2011 through March 31, 2011. Net sales on a constant currency basis excluding the Exterior Portfolio acquisition declined 8 percent. This sales decline was primarily driven by lower sales volumes in the first quarter of 2011, compared to higher volumes in the first quarter of 2010, according to the company. The higher volumes in the first quarter of 2010 were driven in part by housing and construction related tax incentives available in both the United States and Canada, which expired at various times after the end of that quarter.
The segment’s operating loss was $12.1 million for the first quarter of 2011, compared to a $3.7 million operating loss during the same quarter the prior year. The increase in operating loss was primarily due to a change in the geographic sales mix and higher raw materials, conversion and selling costs. The operating loss for the first quarter of 2011 includes a reversal of a non-income tax reserve, Exterior Portfolio acquisition costs and inventory purchase accounting adjustments which are a net benefit of $1.2 million.
“The increased costs of PVC and other raw materials in our Building Products segment is challenging margins. North American demand continues on a very slow pace to recovery as housing and construction markets have remained weak so far in 2011,” says Paul Carrico, president and chief executive officer. “We continue to build on the improvements we have made in this business during the last two years to take advantage of the eventual recovery in both the economy and housing.”
The company reported net income of $12.1 million, or $0.35 per diluted share for the first quarter of 2011, compared to a net loss of $19.0 million, or $0.56 per diluted share during the same quarter in the previous year.
The company reported operating income of $36.6 million for the first quarter of 2011 compared to an operating loss of $10.5 million for the first quarter of 2010. The increase in operating income was primarily driven by higher ECU values and higher chlorovinyls and aromatics sales volumes and prices, partially offset by higher raw materials costs. These factors also contributed to net sales of $787.9 million for the first quarter of 2011, 25 percent higher than the net sales of $631.5 million reported in the first quarter of 2010.