Cabot Corporation shares fall on earnings warning after weak March quarter
Published: 09:08 16 Jun 2023 EDT
Cabot Corporation shares fell in pre-market trade on Friday after the Boston-based specialty chemicals and performance materials company said it no longer expects to meet its fiscal 2023 adjusted earnings per share target after a challenging March quarter.
In a statement, the company noted that its sales volumes in the Performance Chemicals segment for April and May 2023 were 13% lower than the same months in 2022, with declines across all of its product lines excluding Battery Materials.
It added that, while the company has seen its sales volumes for Performance Chemicals improve sequentially in fiscal 3Q over fiscal 2Q, it has been at a slower pace than expected.
“We are not seeing the anticipated pace of recovery in China after a challenging March quarter in the Performance Chemicals segment," Cabot CEO Sean Keohane said.
"In addition to the weakness in China, we continue to see soft demand on a global basis across many of our key end markets, including construction and consumer applications.”
Given these factors, the company now expects its earnings before interest and taxes (EBIT) in this segment in fiscal 3Q to be only “modestly higher” than in fiscal 2Q.
“Although we continue to expect stronger adjusted earnings per share in the second half of the fiscal year as compared to the first half, the magnitude of this increase will be less than we previously expected and we are no longer expecting adjusted earnings per share for fiscal 2023 to be in the range of $6.10 to $6.50," Keohane added.
"We continue to anticipate a robust operating cash flow for the full fiscal year.”
Cabot stock was down 6.4% at US$69.84 before the opening bell in New York Friday.
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