STERLING CHEMICALS ANNOUNCES FIRST QUARTER RESULTS
STERLING CHEMICALS ANNOUNCES FIRST QUARTER RESULTS HOUSTON, Jan. 22 /PRNewswire/ -- At its annual shareholders meeting
today, Sterling Chemicals, Inc. (NYSE: STX) reported revenues and earnings for the first quarter of its 1992 fiscal year ended Dec. 31, 1991.
First Quarter Results. Revenues for the first quarter of fiscal 1992 were $115.9 million compared to revenues of $182.4 million for the first quarter of fiscal 1991, a decrease of 36.5 percent. Net income was $0.7 million for the quarter vs. $24.1 million for the same quarter of the previous fiscal year, a decrease of 97 percent. On a per share basis, net income was $0.01 for the first quarter of fiscal 1992 vs. $0.44 for the first quarter of fiscal 1991, a decrease of 98 percent. Discussion of Results. The decrease in the company's revenues and earnings for the quarter ended Dec. 31, 1991 compared to the same period in the previous year is primarily the result of lower prices and margins for styrene monomer. A scheduled major shutdown of the company's facilities for the production of acrylonitrile and its derivative products also negatively affected revenues and earnings for the period. During the quarter ended Dec. 31, 1991, styrene margins continued to decline due to oversupply and the reduced demand resulting from the worldwide economic slowdown. A year ago, operating problems at other manufacturers' facilities helped to keep styrene in short supply. Iraq's invasion of Kuwait also caused increased demand due to customer concern about the short-term availability of styrene. These factors combined to increased margins significantly during that period. Since then, competitors' operating problems have been resolved, customer concern about the situation in the Middle East has eased, substantial capacity increases in the United States have come on stream and several smaller new plants in the Far East became operational, which significantly reduced U.S. export opportunities. These events together with recessionary factors significantly altered the supply-demand balance for styrene and created downward pressure on margins as producers attempted to force excess production into the market. The scheduled shutdown of the company's facilities for the production of acrylonitrile and its derivative products, sodium cyanide and tertiary butylamine, lasted nearly a month and caused a substantial reduction in plant utilization for the quarter just ended compared to the same period last year when no shutdown occurred. The planned shutdown for routine maintenance resulted in a decrease in earnings of approximately $0.02 per share. After a disappointing beginning, acrylonitrile margins improved slightly during the quarter although they are still weak. J. Virgil Waggoner, president and chief executive officer, said, "While the styrene market continues to be depressed due to overcapacity, recently announced price increases by Sterling and other producers, declining raw material prices, particularly for benzene, and the voluntary extension of construction time for another producer's new facility are all positive signs that styrene margin erosion may be easing. However, given the current recession and the existing overcapacity, we do not expect significant margin improvement in styrene for quite some time." Waggoner also stated, "We are seeing encouraging signs that acrylonitrile margins should improve throughout the year. Acrylonitrile is not suffering to the same degree from overcapacity and the resulting pressure on margins as is styrene. In fact, any combination of a major plant operating problem, a substantial up-swing in synthetic fiber demand or more normal demand for acrylonitrile containing plastics (ABS) could cause a firming of supply-demand balance. Waggoner noted that the company's other products, other than styrene and acrylonitrile, continue to show improvement. Acetic acid had a strong quarter compared to a year ago. He stated, "We are also seeing the positive effects of our long-term contracts which are helping to provide some stability in these tough times." Sterling Chemicals is a major producer of seven intermediate petrochemical products - styrene monomer, acrylonitrile, acetic acid, plasticizers, lactic acid, tertiary butylamine and sodium cyanide. The company is headquartered in Houston. STERLING CHEMICALS, INC. Selected Earnings Information (Unaudited) (In millions, except per share data) Three Months Ended December 31, 1991 1990 Revenues $115.9 $182.4 Gross profit 4.3 39.7 Selling, general and administrative expense 2.0 2.9 Interest and debt related expenses 1.3 1.7 Income before income tax 1.0 35.1 Provision for income tax 0.3 11.0 Net income $ 0.7 $ 24.1 Earnings per share $ 0.01 $ 0.44 Weighted average shares outstanding 55.1 55.0 Depreciation expense 5.5 5.0 Long-term debt as of Dec. 31, 1991 and 1990 was $85.0 million and $66.2 million, respectively. Total stockholders equity as of Dec. 31, 1991 and 1990 was $109.0 million and $119.0 million, respectively. -0- 1/22/92 /CONTACT: J. David Heaney, vice president-administration of Sterling Chemicals, 713-650-3700/ (STX) CO: Sterling Chemicals Inc. ST: Texas IN: CHM SU: ERN SH -- NY051 -- 2254 01/22/92 11:38 EST
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|Date:||Jan 22, 1992|
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