Strong Connections for Wire & Cable ProductsMay 24, 2006 | Comments : 0 Recommended this article: (0)
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Wire & cable products companies continue to put together impressive quarterly reports, despite the ongoing cost increases for materials such as copper and aluminum. This has helped the space stay in the top ten of the Zacks Industry Rank.
"We are in a highly volatile material cost environment, explained Belden CDTs President and CEO John Stroup in their recent report. It will be a continuing challenge in such an environment to manage our pricing in all markets to ensure that we are maintaining and improving our profitability. While this might entail additional, perhaps sizable price increases, we now have the processes in place to move quickly and prudently.
Pricing is an important aspect for a successful company in this field, especially in the current environment. Rising copper prices, for example, could be a major problem if companies are unable to pass the increase on to customers. Fortunately, many companies have been able to do just that, enabling expansion in profit margins.
The wire & cable products industry currently has a Zacks Industry Rank of 1.88, which places it fourth out of more than 200 industries. When we last visited the space in November, it had a rank of 2.14.
Leaders in the Industry
General Cable Corporation ( BGC ) is a global leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the energy, industrial, specialty and communications markets.
General Cable posted first quarter revenue of $804.3 million, which marks the highest quarterly revenue in the companys history. Meanwhile, earnings per share surged 128% to 41 cents per share, compared to 18 cents in the first quarter 2005. The result also beat the consensus by approximately 52%. According to General Cable, the average price per pound of copper and aluminum were up 78 cents and 21 cents respectively on a year-over-year basis, while increasing 22 cents and 16 cents sequentially.
The market understands the reality of cost increases that are beyond our control and we have successfully continued to shorten the window of exposure to un-recovered raw material and other price inflation for the non-contractual portion of our business, said President and CEO Gregory B. Kenny. In addition, we continue to work closely with our contractual customers to modify contract language as necessary to ensure that raw material and other price inflation are dealt with equitably.
General Cable recently announced that it expects second quarter earnings per share at the high end, or maybe above, the previous guidance of between 40 cents and 45 cents. The company made this announcement despite the continuing sharp rise in copper and aluminum prices since its first quarter earnings release. To further research General Cable Corporation, click BGC .
Belden CDT Inc. ( BDC ) is one of the largest U.S.-based manufacturers of high- speed electronic cables and focuses on products for specialty electronics and data networking, including connectivity.
For its first quarter, Belden CDT reported that revenue advanced 12.4% to $321.9 million, which reflects organic growth of 13.7% that was offset by unfavorable currency translation of 1.3%. Furthermore, earnings per share moved forward year-over-year and topped the consensus. Despite the high copper prices, the company was able to deliver increased operating profits due to disciplined pricing, improved factory utilization, favorable mix and the impact of cost reduction programs from 2005.
Belden CDT raised its earnings guidance for 2006 to between $1.55 and $1.70, which includes option expense but excludes any further restructuring charges, severance pay, and accelerated depreciation associated with the European restructuring program and any similar charges that might occur. Its success in keeping pace with material cost increases will heavily influence the companys ability to achieve this level of profitability. To further research Belden CDT Inc., click BDC .
Superior Essex Inc. ( SPSX ) is one of the largest wire and cable manufacturers in the world. It manufactures a broad portfolio of wire and cable products with primary applications in the communications, magnet wire and related distribution markets.
Superior Essex reported first quarter adjusted earnings per share of 54 cents on revenues of $652 million. That earnings result increased 59% from 34 cents in the first quarter 2005, and also eclipsed the consensus by about 46%. Revenues improved from $403 million. Revenue growth was helped from the companys October 2005 Essex Nexans acquisition, as well as from continued revenue expansion in both of its North American Core Business segments.
Year over year, we also generated a 40% increase in adjusted EBITDA and a 59% increase in adjusted earnings, thanks to profit accretion from our European joint venture and strengthening profitability in our Communications business, said CEO Stephen M. Carter.
Looking forward, Superior Essex said its outlook from a revenue perspective for the second quarter continues to be positive, with year-over-year acquisition gains expected from the European Magnet Wire business and solid demand trends continuing in the North American businesses. The company remains very confident in meeting previously stated full-year growth targets for revenues and adjusted EBITDA, absent any negative impact on demand and assuming reasonable success in recovering continued cost increases. To further research Superior Essex Inc., click SPSX .
Encore Wire Corporation ( WIRE ) manufacturers a broad range of copper electrical wire for interior wiring in homes, apartments, manufactured housing and commercial and industrial buildings.
First quarter earnings per share reached 68 cents for Encore Wire on net sales of $252 million. That earnings result jumped year-over-year while beating the consensus by more than 54%. Sales surged 83.7% from $137.2 million. The increase in net sales dollars was due mainly to higher wire prices along with a unit sales increase of more than 18%. The quarters results marked a new record for quarterly sales and the second best quarterly earnings in its history. According to the company, the trailing four quarters combined have produced net sales of $873.0 million and fully diluted earnings per share of $2.76.
Earnings estimates for the second quarter have improved for Encore Wire, jumping by more than 52% over the past 30 trading days. Furthermore, expectations for the full year are up approximately 42% in that timeframe. To further research Encore Wire Corporation, click WIRE .
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