After Koppers Holdings announced Thursday that it swung to a profit in the fourth quarter, its president and chief executive said the Downtown-based company is well on its way to shifting its primary business away from carbon chemicals and into wood treatments and preservatives.
“Our future prospects will continue to improve … and the shift to healthier end-markets was the right decision,” Leroy Ball told analysts in a conference call after the earnings release.
Since Mr. Ball took the helm of Koppers two years ago, he has overseen a transformation of the company from its roots producing chemicals used in metals manufacturing to one focused on growing its performance chemicals used to treat lumber for home construction and repairs.
Wood-related revenues generated 67 percent of gross sales in 2016, up from 47 percent at the end of 2014, he said.
For the fourth quarter, net income was $6.4 million, or 30 cents per share, compared with a loss of $87.7 million, or $4.27 per share in the year-ago quarter.
Sales declined by 14 percent to $313.2 million, from $363.7 million the prior year as the company generated lower volumes from its carbon operations.
But sales still beat Wall Street analysts’ average estimate of $302.8 million.
Adjusted income not including charges for restructuring expenses… was $8.5 million, or 40 cents per share, beating Wall Street analysts’ estimates of 26 cents.
As part of its focus on the wood treatment business, Koppers has been closing carbon chemicals plants worldwide, including its facility in Clairton that employed about 50 workers.
That closure and others were attributed directly to a glut in the aluminum industry, which used carbon pitch in aluminum smelters.
Koppers now operates four carbon chemicals facilities compared with 11 several years ago. While it will continue to sell chemicals to aluminum makers, “We’re not pinning our future hopes or profitability … on that industry,” Mr. Ball said.
He’s banking on growth in performance chemicals based on a strong outlook for home sales and the remodeling market.
In the fourth quarter, sales of Koppers’ performance chemicals jumped by 13 percent, driven by a strong market for home repairs and existing home sales, he said.
Shares in Koppers closed at $43.30, down 35 cents.
Joyce Gannon: jgannon@post-gazette.com or 412-263-1580.
First Published: February 23, 2017, 2:52 p.m.