GrafTech International reports increase in sales, but profits lag

Demand for products made by GrafTech International is growing, but the costs of buying two other companies restrained the company's profits in the first quarter.

With headquarters in Parma, GrafTech is a global manufacturer of graphite electrodes for steel making and graphite parts for fuel cells and.

The company on Wednesday reported first quarter sales of $306 million, a 42 percent electronic products increase from the same time a year ago.

Net income after expenses was just $27 million, or 19 cents per share, compared with profits a year ago of $35 million, or 29 cents per share.

GrafTech Chief Executive Officer Craig Shular cited heavy expenses to integrate two companies GrafTech purchased last year, a competitor and a supplier of needle coke, the raw material used to make graphite.

Also, despite dramatic growth of electrode sales, the company faced higher raw material costs, he said, and lower electrode prices in the face of competition.

Shular said the company's production lines are running at more than 80 percent of capacity, up from 71 percent during the first quarter.

Because steel making is expected to increase around the world, Shular said he expected his company's production of graphite rods will run at more than 90 percent of capacity by the end of the year.

"What we see is each quarter continuing to improve," he said in answer to an analyst's question during a teleconference. "We are very pleased."

The increase in demand as well as a decrease in costs associated with buying other companies should increase the company's bottom line, he said.

"I think going into 2012 . . . we would be very bullish," he said.

Source: John Funk, The Plain Dealer