Kraton moves to profit in 2008, despite Q4 loss

ERJ staff report (DS)

Houston, Texas -- Kraton Polymers has reversed the losses recorded in 2007 to report a net profit of $28 million for the 12 months ended December 2008. The positive result masks a complicated picture for the period, however.

For the 12 months, sales were up to $1226 million, from $1090 million a year earlier. Gross profits were up up by 69 percent, to $255 million, while net profits were $28 million, up by $72 million from the net loss of $44 million recorded a year earlier.

For the final three months of 2008, the picture was very different. Although revenues were down, at $232 million (from $258 million), gross profit rose to $49 million (from $21 million), while the net loss in the final quarter was $7 million, an improvement on the loss of $36 million recorded a year earlier.

In a statement, Kraton said, "The demand softness in the fourth quarter of 2008 has continued into 2009. Kraton currently estimates first quarter 2009 sales volume could be approximately 40% below first quarter 2008 sales volume. In addition, the first quarter 2009 results will reflect lower margins commensurate with selling higher-cost inventory produced when feedstock prices were above our current replacement cost, the negative effect of which could be in the range of $35 to $40 million."

The company's CEO, Keith Fogarty said, "each of Kraton's end-use markets recorded a decline in sales volume in the fourth quarter as customers aggressively reduced inventories, resulting in an aggregate 36% decline in sales volume compared to the fourth quarter of 2007."

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Press release from Kraton