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SUNDAY, MAY 6, 2007
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Decatur fares well in quarter results

Most of the results for the first quarter of 2007 are in, and public companies with a Decatur presence generally fared well. A sampling:

Hexcel Corp. is having a great run, buoyed by Boeing Co.’s exploding demand for carbon fiber in its newest passenger jets. Its sales were up 9 percent in the first quarter over year-ago results, with net income coming in at 17 cents per share compared to 14 cents per share a year ago. The Iraq War has helped Hexcel, driving its sale of body armor fabrics and military airplane components. Interestingly, it has also seen a jump in wind energy applications.

Bunge Ltd. was slammed with a 76 percent drop in first-quarter profit versus year-ago results. Most of the reduction related to its purchase of commodity futures at inflated prices; large crop yields and a delay in demand for biofuels kept crop prices lower than expected. Like almost everyone else, Bunge is looking to expand into China, where it is buying an interest in a soybean processing facility. Despite its unfortunate commodity experience, Bunge said it expects its fertilizer sales to grow with increased corn production for fuel ethanol.

Area banks did well, benefiting from a strengthening economy. Compass Bancshares Inc. saw a 5 percent increase in profits relative to the first quarter in 2006. That’s good news for its purchaser, Spain’s Banco Bilbao Vizcaya Argentaria SA, which expects to complete the transaction later this year. Regions Financial Corp. saw profits jump 13 percent compared to year-ago results, although share dilution minimized the benefit to shareholders. Charges related to its purchase of AmSouth Bancorporation cost it 4 cents per share in the first quarter. Alabama National BanCorporation, owner of First American Bank, reported a 12 percent increase in earnings but, like Regions, it suffered from an increase in outstanding shares.

Boeing Co., which owns half of United Launch Alliance and has a major presence in Huntsville, is on a tear. It reported a 27 percent increase in earnings versus year-ago results. Much of its success revolves around the design of the Dreamliner, a midsized, lightweight passenger jet that is trouncing the superjumbo A380, made by competitor Airbus, in sales. A major component of the Dreamliner is carbon fiber, which it receives from two companies with a Decatur presence: Hexcel and Toray Carbon Fibers America Inc. Like Hexcel, Toray recently expanded its production.

International Paper, which is expanding its Courtland plant, had a phenomenal quarter. Because of restructuring costs, its year-ago results had been a loss of $2.54 per share. Analysts projected a profit in the first quarter of 2007 of 40 cents, but IP wasn’t listening.

It earned 94 cents a share, 45 cents of which was from continuing operations. As part of its restructuring plan, IP has sold 5.7 million acres of forestland, including much in Alabama.

On its face, Wolverine Tube Inc. had a disastrous first quarter. It lost 46 cents per share. Most of that, however, involved the restructuring and change in control that took place during the quarter. Absent those costs, it would have reported earnings of 5 cents per share. Shareholders of the company, which was booted off the New York Stock Exchange and now trades over the counter, are in a quandary. The company is seeking Securities and Exchange Commission approval to issue 46.4 million new shares of stock at $1.10 per share. The bad news: That would seriously dilute existing shareholders’ interest.

The good news: It could raise more than $50 million, and Wolverine’s continued existence depends upon debt reduction and liquidity.

Contact Eric Fleischauer at eric@decaturdaily.com.

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Eric Fleischauer
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