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Kronos Worldwide Reports First Quarter Results

Published on 2005-05-09. Author : SpecialChem

DALLAS -- Kronos Worldwide, Inc. reported net income for the first quarter of 2005 of $21.4 million, or $.44 per diluted share, compared with net income of $9.8 million, or $.20 per diluted share, in the first quarter of 2004.

Net sales of $291.9 million in the first quarter of 2005 were $28.6 million, or 11%, higher than the first quarter of 2004 due to the net effects of higher average TiO2 selling prices, lower sales volumes as well as the favorable effect of fluctuations in foreign currency exchange rates, which increased sales by approximately $11 million.

The Company's average selling prices in billing currencies (which excludes the effects of fluctuations in the value of the U.S. dollar relative to other currencies) were 8% higher in the first quarter of 2005 as compared to the first quarter of 2004. Expressed in U.S. dollars computed using actual foreign currency exchange rates prevailing during the respective periods, the Company's average selling prices in the first quarter of 2005 were 13% higher than the first quarter of 2004. Reflecting the continued implementation of price increase announcements, the Company's average selling prices in billing currencies in the first quarter of 2005 were 4% higher compared to the fourth quarter of 2004.

The Company's first quarter 2005 TiO2 sales volumes decreased 3% from the first quarter of 2004, due primarily to lower sales volumes in export markets. The Company's TiO2 production volumes were 4% higher in the first quarter of 2005 as compared to the first quarter of 2004, with operating rates at near full capacity in both periods. Finished goods inventories at March 31, 2005, representing 1.9 months of average sales, were slightly higher as compared to December 31, 2004 levels. The Company's production volume in the first quarter of 2005 was a new record for a first quarter.

The Company's TiO2 segment profit (see description of non-GAAP information below) for the first quarter of 2005 was $48.0 million compared with $26.2 million in the first quarter of 2004. Segment profit comparison was impacted by the net effects of the higher average TiO2 selling prices, higher production volumes and lower sales volumes. Fluctuations in foreign currency exchange rates did not have a significant effect on segment profit comparison.

Interest expense to affiliates for the first quarter of 2004 relates primarily to the Company's $200 million 9% long-term note payable to affiliates issued in December 2003, which was prepaid in November 2004.

Other interest expense increased due primarily to higher levels of indebtedness resulting from the issuance of an additional euro 90 principal amount of the Company's Senior Secured Notes in November 2004. Additionally, other interest expense increased due to relative changes in foreign currency exchange rates, which increased the U.S. dollar equivalent of interest expense in the first quarter of 2005 on the Company's euro 285 million Senior Secured Notes issued in June 2002 (and outstanding during the first quarter of 2004) by approximately $500,000 as compared to the year-ago period.

Kronos Worldwide, Inc. is a major international producer of titanium dioxide pigments.

The statements in this release relating to matters that are not historical facts are forward-looking statements that represent management's beliefs and assumptions based on currently available information. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such forward-looking statements. While it is not possible to identify all factors, the Company continues to face many risks and uncertainties.

Source: Kronos Worldwide


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