By Tess Stynes and Anna Prior
Worthington Industries Inc.'s (WOR) fiscal first-quarter
earnings jumped 61% as the steel processing and metals-products
company received a boost from tax adjustments related to its
increased interest in its laser welded blanks joint venture.
The steel industry has struggled broadly with weaker prices,
though signs are emerging that the sector's prospects may brighten,
such as data indicating China's economy is stabilizing, as well as
improving trends in Europe and the U.S.
Worthington has been transforming its business from primarily
steel processing to the manufacture of finished goods, in part
through a series of acquisitions.
The company recently expanded its ownership in its welded-blank
joint venture, TWB. China-based Wuhan Iron & Steel Co.
(600005.SH) recently acquired German steelmaker ThyssenKrupp AG's
(TYEKY, TKA.XE) 45% stake in the venture and Worthington
subsequently an additional 10% stake, raising its ownership to
55%.
"We had a very good quarter with solid results from our steel
processing and pressure cylinders businesses and several of our
joint ventures," said Chairman and Chief Executive John McConnell.
"Our outlook continues to be positive. We are encouraged by the
improvements we are seeing in the commercial construction and the
agriculture markets and the continued strength in automotive."
For the period ended Aug. 31, Worthington reported a profit of
$54.6 million, or 76 cents a share, up from $34 million, or 49
cents a share, a year earlier. The latest period included an $11
million pre-tax gain and a $4.5 million favorable tax adjustments
related to the acquisition of an additional 10% interest in the
company's laser welded blanks joint venture, TWB. These items,
netted with restructuring and impairment charges, increased
earnings by 18 cents per share.
Revenue increased 3.9% to $692.3 million.
Analysts polled by Thomson Reuters recently expected per-share
profit of 58 cents and revenue of $693 million.
Gross margin widened to 16% from 14.1%.
Revenue from the steel-processing business, Worthington's
biggest top-line contributor, rose 4.5% to $402.4 million, as
higher volume resulting from the consolidation of TWB and increased
sales in the agriculture and heavy truck markets were partially
offset by the impact of lower average selling prices due to a shift
in product mix.
Pressure cylinder sales were up 12% to $22.7 million, aided by
recent acquisitions.
Engineered cabs posted sales of $48.5 million, down 25%.
Shares closed Wednesday at $33.92 and were inactive in recent
after-hours trading. Through the close, the stock was up 31% this
year.
Write to Tess Stynes at tess.stynes@wsj.com
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