Rohm & Haas 4Q Net Dives 82% On Charges, Weak Demand

   DOW JONES NEWSWIRES 
 

Rohm & Haas Co.'s (ROH) fourth-quarter net income plunged 82%, hurt by falling demand and restructuring charges, along with the rest of the bellwether chemical industry..

The specialty-chemical company and it rivals have announced plant closings, layoffs and bankruptcy filings in recent weeks, as their customers have been slow to replace inventories amid the weakening economy.

The industry's woes and continuing credit crunch threw a wrench into Rohm & Haas' deal to be acquired by Dow Chemical Co. (DOW), following the Kuwaiti government's withdrawal from a planned $17.4 billion joint venture with Dow. Dow has said it won't close the $15.3 billion acquisition for some time due to the recession and financing problems; it was left with a $9 billion shortfall due to the joint venture's collapse. Rohm & Haas has sued Dow to force it to complete the deal.

Rohm & Haas, which makes paint additives and also markets Morton salt, reported net income of $32 million, or 17 cents a share, down from $180 million, or 91 cents a share, a year earlier.

Excluding 52 cents in charges, including 41 cents for restructuring and 8 cents associated with the proposed Dow merger, earnings fell to 69 cents a share from 90 cents.

Rohm & Haas had forecast fourth-quarter charges of $90 million as it adjusted production schedules. Three weeks ago, Rohm & Haas announced a plan to cut 5.7% of its work force, or 900 positions, on top of 925 job cuts announced in June, in a move to cut costs. It also imposed a freeze on salaries and discretionary spending. The combined moves are expected to produce pretax savings of $200 million in 2010, with $90 million in savings coming from the latest cuts, it said Monday.

Net sales fell 13% to $2.03 billion, as market declines hurt all its businesses except salt.

Analysts surveyed by Thomson Reuters were expecting earnings, excluding items, of 67 cents a share, on revenue of $2.28 billion.

Gross margin fell to 25.8% from 27.3%, amid falling demand and the stronger dollar.

The dollar's impact on overseas sales was reflected in sales falling across all regions, led by Asia-Pacific and Europe with 20% and 19% declines, respectively. North American sales fell 8%.

Sales for paint and coatings materials fell 12%. Primary materials sales dropped 14%. Salt sales rose 10%.

Shares closed at $56.50 on Friday and didn't trade premarket.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]