General Cable Corporation (BGC) reported third-quarter 2010 earnings from continuing operations of 54 cents, above the Zacks Consensus Estimate of 50 cents. The company’s earnings per share were below the year-ago quarter’s earnings from continuing operations of 98 cents.
Total revenue, on a metal adjusted basis, increased by 1.2% year over year to $1.2 billion, at upper end of the company’s guidance range of $1.15 billion to $1.2 billion. Excluding unfavorable foreign currency exchange rate changes of $47.3 million, total revenue increased to 5.1%
The year-over-year increase in revenue was led by 6.7% increase in volume based on metal pounds sold. General Cable witnessed a year-over-year increase in volume after nearly two years. On a sequential basis, sales volume surged 7.3%. The company experienced an increased demand in many of its businesses, leading to an overall increase in volume.
General Cable’s business was aided by its recent acquisition of BICC Egypt, which expanded the geographical presence of the company and also by increased business opportunity in the emerging markets. During the quarter, the company received €195 million offshore wind high-voltage project in the Baltic.
Geographically, volume decreased by 11.6% in North America and was up 8.5% sequentially. In Europe, volume decreased by 3.2% year over year and was down 5.6% sequentially. In the Rest of World, volume increased by 10.2% year over year and was up 16.8% sequentially, primarily due to growth in Brazil, Thailand and Chile.
Income & Expenses
Operating income decreased to $42.1 million from $59.8 million in the second quarter of 2010, driven by seasonal reduction of inventory and the traditional summer holiday period in Europe. Income in the quarter was also affected by weak value-added pricing due to continued low demand in comparison with historical levels and low capacity utilization rates in certain markets.
During the quarter, COGS increased $1,075 million from $916.1 million in the third quarter of 2009 resulting in a decrease in gross profit by 40.4 million despite an increase in revenue. SG&A expenses were $83.2 million compared with $81.3 million.
Balance Sheet
Cash and cash equivalents were $391 million with long-term debt of $882.3 million and shareowner’s equity of $1.6 billion.
Outlook
Though General Cable recorded an increase in demand for its products during the quarter, it prefers to maintain a cautious stance for future as demand in many end-markets continues to be below historical range and pricing environment remains challenging. The company is also uncertain whether the improving demand trends will prevail or not.
General Cable expects its earnings from continuing operations to be in the range of 40 cents to 50 cents in the fourth quarter of 2010. Total revenue is expected to be in the range of $1.3 billion to $1.35 billion. Volumes are expected to increase to be in the range of 5% to 8% as compared with the third quarter.
Based in Highland Heights, Kentucky, General Cable Corp. is a global leader in developing, designing, manufacturing, marketing, distributing and installing copper, aluminum, and fiber optic wire and cable products. The company is able to offer its customers a single source for most of their wire and cable requirements. General Cable has a Zacks #3 Rank, which signifies a Hold rating over the next one-to-three months.
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