FMC Reports 1999 Second Quarter Results

Chicago (PROTEXT) - FMC Corporation (NYSE: FMC) today reported second quarter earnings per share on a diluted basis from continuing operations of $2.10, up 11 percent from $1.89 in the 1998 second quarter, on sales of $1.1 billion. After-tax income from continuing operations of $69 million increased from $68 million in the 1998 second quarter. According to FMC Chairman and Chief Executive Officer Robert N. Burt, "During the quarter we made significant progress on all the businesses we needed to fix or exit and aggressively invested in growth platforms. We announced plans to divest our process additives operation and to form a joint venture with Solutia in phosphorus chemicals. We also saw profitability in hydrogen peroxide improve and executed a supply agreement that will improve our cost position in commodity lithium chemicals. In addition, we acquired Tg Soda Ash and a Norwegian alginate producer. Our financial performance continued to track our long- term goals. EPS was up 11 percent, ROI continues to improve, and we met or exceeded Wall Street expectations for the sixth straight quarter." Review of Operations Energy Systems sales were $294 million, down $24 million from the prior- year quarter; however, earnings of $25 million were up 9 percent from the 1998 second quarter. The decrease in sales reflected the impact of lower oil prices on land wellheads and fluid control equipment. Increased earnings reflected cost reductions, as well as higher subsea sales to major integrated oil companies. Sofec also had increased sales, which included the PetroCanada Terra Nova project received last year. Energy Systems backlog was $692 million, and is still declining from its peak of more than $1 billion in mid-1998, but currently is close to average historic levels. Food and Transportation Systems sales of $217 million were down from $242 million in last year's quarter. Profits of $19 million were down $1 million from the 1998 second quarter. Lower sales and earnings primarily reflected lower sales of airline cargo loaders in Asia and North America, and lower volumes of passenger boarding bridges due to delays in airport projects. Earnings were up in FMC FoodTech, reflecting higher sales of tomato processing systems in a number of countries and of freezing systems in Europe. Food and Transportation Systems backlog was $269 million, down slightly from the end of the first quarter. Agricultural Products sales of $175 million were down 3 percent from the prior-year quarter, but profits of $37 million were up 4 percent from the 1998 second quarter. Lower sales largely reflected the impact of lower crop prices and lower Command herbicide sales due to the wet planting season. Early- season sales in Brazil also were down, due to the continuing effects of that country's economic issues. Increased earnings reflected continued cost reductions as well as an improved sales mix. During the period, product repositioning and label expansions increased sales of Capture, a premium pyrethroid. In addition, FMC's new herbicide, carfentrazone-ethyl, was introduced on corn and rice in North America. Specialty Chemicals sales of $153 million were down slightly, and earnings of $22 million were down approximately $4 million. Sales and profits of the lithium business decreased as competitive pressure continued. During the quarter, FMC announced an agreement to source lithium carbonate from SQM, and took a small restructuring charge to suspend lithium carbonate production in Argentina until market conditions improve. Pharmaceutical and Food Ingredients experienced some production issues in the second quarter, slightly reducing profitability. During the second quarter, FMC completed the purchase of the alginate business from Norsk Hydro and announced the sale of its process additives and bioproducts divisions. The bioproducts transaction closed in early July, and process additives is expected to close at the end of this month. Industrial Chemicals sales of $238 million were down slightly, but profits of $37 million were up 14 percent from the prior-year period. Hydrogen peroxide earnings improved, reflecting increased prices and lower costs. Soda ash prices and volumes were down due largely to weakness in Asia, which was partially offset by continued cost reductions. As previously announced, on June 30, FMC completed the acquisition of Tg Soda Ash from Elf Atochem North America, which adds 1.3 million tons of nameplate production capacity. During the quarter FMC also announced plans for a joint venture of the phosphorus businesses of FMC and Solutia. The venture will provide complementary market strengths and significant synergies, and is expected to be completed in the fourth quarter of 1999. In addition, during the second quarter, a federal judge set aside a $38 million jury verdict and ordered a new trial in a chemical release case in West Virginia, due to incorrect testimony by a major plaintiff witness. Corporate expenses were $19 million, down from $20 million in the prior- year period, reflecting continued cost control. Net interest expense was $27 million, down $1 million from the 1998 second quarter. Net income for the 1999 second quarter was $86.9 million, which includes the sale of a discontinued defense property in California for $34 million, with a gain of $18 million after tax. Six Month Results For the first six months of 1999, sales were $2 billion, down slightly from the first half of 1998. After-tax income from continuing operations was $99 million, up 5 percent from the prior-year period. Earnings per share from continuing operations were $3.01, up 14 percent from the 1998 first half. Energy Systems sales were down, reflecting lower oil prices for much of 1999, but profits were up approximately $4 million in the 1999 period, reflecting continued cost cutting and strong subsea shipments. Food and Transportation Systems sales were down, largely reflecting lower sales of airport products. Earnings were up, reflecting improved profits in freezer systems and tomato processing systems. Agricultural Products sales were down, but profits were up, reflecting cost-cutting measures and improved product mix. Specialty Chemicals sales and profits were down, primarily reflecting lower lithium results from continued price competition. Industrial Chemicals sales were down, primarily due to lower soda ash prices and volumes, but earnings were up, reflecting overall lower costs and improved hydrogen peroxide performance. Corporate expenses in the 1999 first half were $4 million lower than in the prior-year period. FMC Corporation is one of the world's leading producers of chemicals and machinery for industry and agriculture. FMC employs approximately 16,000 people at more than 100 manufacturing facilities and mines in 25 countries. The company divides its businesses into five segments: Energy Systems, Food and Transportation Systems, Agricultural Products, Specialty Chemicals, and Industrial Chemicals. Safe Harbor Statement under the Private Securities Act of 1995: Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning specific factors in the corporation's Form 10-K report and other SEC filings. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The corporation does not intend to update this information and disclaims any legal obligation to the contrary. FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited and in millions, except per share amounts) Three Months Six Months Ended June 30 Ended June 30 1999 1998 1999 1998 Sales $1,070.4 $1,129.4 $2,045.1 $2,151.8 Total costs and expenses 949.7 1,009.1 1,855.1 1,969.8 120.7 120.3 190.0 182.0 Minority interests 1.2 0.9 1.8 1.8 Net interest expense 26.8 28.2 54.7 52.8 Income from continuing operations before income taxes and cumulative effect of change in accounting principle 92.7 91.2 133.5 127.4 Provision for income taxes 23.8 23.6 34.3 33.0 Income from continuing operations before cumulative effect of change in accounting principle 68.9 67.6 99.2 94.4 Discontinued operation, net of income taxes 18.0 -- 18.0 -- Income before cumulative effect of change in accounting principle 86.9 67.6 117.2 94.4 Cumulative effect of change in accounting principle, net of income taxes* -- -- -- (36.1) Net income $86.9 $67.6 $117.2 $58.3 Basic earnings per common share: Continuing operations $2.17 $1.95 $3.09 $2.72 Discontinued operation 0.56 -- 0.56 - - Cumulative effect of change in accounting principle* -- -- -- (1.04) Net income per common share $2.73 $1.95 $3.65 $1.68 Average number of shares used in basic earnings per share computations 31.8 34.6 32.1 34.7 Diluted earnings per common share: Continuing operations $2.10 $1.89 $3.01 $2.64 Discontinued operation 0.55 -- 0.55 -- Cumulative effect of change in accounting principle* -- -- -- (1.01) Net income per common share $2.65 $1.89 $3.56 $1.63 Average number of shares used in diluted earnings per share computations 32.8 35.7 32.9 35.7 * Reflects the required write-off in 1998 of $46.5 million of capitalized start-up costs under an accounting pronouncement issued in March 1998. FMC CORPORATION AND CONSOLIDATED SUBSIDIARIES INDUSTRY SEGMENT DATA (Unaudited and in millions) Three Months Six Months Ended June 30 Ended June 30 1999 1998 1999 1998 Sales Energy Systems $294.1 $318.0 $584.3 $605.8 Food and Transportation Systems 217.3 241.5 398.8 420.6 Agricultural Products 175.1 180.9 321.7 352.9 Specialty Chemicals 153.2 155.7 301.7 310.2 Industrial Chemicals 238.0 241.2 451.4 478.3 Eliminations (7.3) (7.9) (12.8) (16.0) Total $1,070.4 $1,129.4 $2,045.1 $2,151.8 Income from continuing operations before income taxes and cumulative effect of change in accounting principle Energy Systems $24.6 $22.5 $41.4 $37.2 Food and Transportation Systems 19.0 19.8 29.5 28.0 Agricultural Products 36.9 35.5 51.6 50.3 Specialty Chemicals 21.5 25.3 40.3 44.9 Industrial Chemicals 36.8 32.3 71.3 64.8 Operating profit from continuing operations 138.8 135.4 234.1 225.2 Corporate (19.1) (20.0) (39.2) (43.3) Other income and (expense), net (0.2) 4.0 (6.7) (1.7) Net interest expense (26.8) (28.2) (54.7) (52.8) Income from continuing operations before income taxes and cumulative effect of change in accounting principle $92.7 $91.2 $133.5 $127.4 ots Original Text Service: FMC Corporation Internet: http://www.newsaktuell.de Contact: Investor Relations, Randy Woods, (in the USA) 312-861-6160, or Media, Tom Kline, 312-861- 6100, or Pat Brozowski, 312-861-6104, all of FMC Corporation Company News On-Call: http://www.prnewswire.com/comp/121861.html or fax, (in the USA) 800-758-5804, ext. 121861 Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. 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