Ferro lowers 4Q estimates, dividend, '09 outlook

Chemicals maker Ferro Corp. on Friday said it will lower its quarterly dividend and expects to report a fourth-quarter loss and reduced 2009 outlook, driven by a sharp decline in customer demand across multiple segments.

Ferro estimated fourth-quarter sales would drop 25 percent to between $430 million and $435 million, compared with last year, resulting in a loss of 17 cents per share, excluding special gains and charges. The new estimate is significantly below its prior forecast of sales of $500 million to $550 million and earnings of 33 cents to 38 cents per share, which included a gain of about 31 cents per share related to the sale of its fine chemicals business and a charge of 13 cents per share related to manufacturing reorganization activities.

Analysts polled by Thomson Reuters forecast a profit of 10 cents per share on revenue of $510.4 million. Analysts typically exclude one-time charges.

The company also slashed its quarterly common stock dividend to 1 cent per share from last quarter's payout of 15 cents per share, in order to reduce annual cash outlays by about $23.6 million.

This is an extension of the cost cutting initiatives the company employed throughout 2008. In 2008 the company cut 12 percent of its work force, restructured its inorganics business in Europe, closed its plant in Toccoa, Ga., and cut its capital spending, among other initiatives. Ferro said it will likely cut more jobs in 2009, but did not specify how many or when. A company spokesperson said it will be an ongoing consideration based on customer order volumes and economic conditions.

"Initiatives to reduce costs and expenses produced strong year-over-year earnings improvement through the first ten months of 2008, but were not sufficient to offset the abrupt global slowdown in the fourth quarter," said Chief Executive James Kirsch.

Shares of Ferro fell 74 cents, or 15 percent, to $4.22 in afternoon trading, after earlier slumping to a record low of $4.18.