Union Carbide (UK), a component of the Dow Industrial Average, said it expects weakness in fourth-quarter earnings as well.
"Given major cost improvement programs under way, the fourth quarter will be at or near the bottom in terms of financial performance," the company said in a press release.The chemical and plastics maker said its third-quarter earnings were 55 cents per share, four cents short of the 59-cent estimate in a survey of analysts by Zacks Investment Research. The results beat the 53-cents-a-share estimate of analysts surveyed by First Call.
Union Carbide shares fell 13/16 to 39 ahead of the news Friday.
The company's third-quarter profit fell to $76 million or 55 cents per share vs. the year-ago profit of $179 million or $1.18 per share.
Sales in the third quarter totaled $1.4 billion compared to $1.7 billion in the year-ago period
CEO William H. Joyce said in a statement that the company's results reflect "continuing market weakness, particularly in Asia." Prices of major basic chemicals fell to "trough levels" and may affect earnings in the fourth quarter, he said.
"Continued demand weakness in Asia and the associated erosion in pricing, together with modest increases in feedstock costs and the normal seasonal weaknesses in several businesses, will most likely depress fourth quarter earnings," Joyce said.
Earnings for the third quarter were affected by about $24 million in for the expansion of an olefins plant in Taft, La. and $6 million related to the disruption of the company's Equate joint venture operations in Kuwait caused by transformer outages at the government-owned utility supplying electricity.
The company's Specialties & Intermediates unit posted a profit of $233 million vs. $166 million in the second quarter of 1998 and $170 million in the third quarter of 1997. The segment accounted for 73.7 percent of the company's sales for the quarter.
Carbie's Basic Chemicals & Polymers segment reported an operating loss of $13 million, compared to operating profit of $42 million in the 1998 second quarter and $125 million in the same period last year.
Written By Steve Gelsi