Molycorp Inc. owner of the largest rare-earth deposit
outside China, reported a wider-than-expected loss after the company missed a
production target and prices for the commodities declined.
The fourth-quarter net loss was $359.6 million, or $2.91 a share, the
Greenwood Village, Colorado-based company said yesterday in a statement after
the close of trading. The company reported net income
of $26.6 million or 26 cents a year earlier.
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Excluding a $264.3 million write down and other one-time items, the loss was
45 cents a share, wider than the 30-cent average of six analysts’ estimates
compiled by Bloomberg. Sales rose 1 percent to $134.3 million, missing the
$138.5 million average of four estimates.
Molycorp was originally scheduled to report its results at the end of last
month. On Feb. 28, the company said it needed more time to determine the size
of the non-cash impairment charge related to its C$1.3 billion ($1.3 billion)
acquisition of Toronto’s Neo Material Technologies Inc., which was completed in
June.
The company said its “financial performance” in the first half of 2013 will
be “slightly weaker” than in the second half of last year. High inventories
held by end-users and lower prices will offset improving demand from the auto,
oil and battery industries, Chief Executive Officer Constantine Karayannopoulos
said in an interview yesterday. Customers will return to the market “in a
meaningful way” by the third quarter, he said.
Missed Target
Molycorp rose 3.3 percent to $6.19 in New York.
“Until the inventories are exhausted and customers have the confidence they
can start
buying rare-earths from a reliable producer with some visibility on prices, I
don’t think we’ll see large-scale return into the markets,” the CEO said.
Molycorp said Jan. 10 its Mountain Pass mine complex in California missed a
target of producing rare-earth oxides at an annual rate of 19,050 metric tons
by the year-end. The company now plans to meet that target by the middle of
2013.
In November, Molycorp said it was being investigated by the U.S. Securities
and Exchange Commission over the accuracy of its public disclosures. It fired
CEO Mark Smith in December, replacing him with Karayannopoulos.
Investor Credibility
“The biggest issue that’s within their control is credibility with
investors,” said Ben Kallo, an analyst at Robert W. Baird & Co. Inc in San
Francisco. “The management team did a good job of starting the process of
restoring credibility which I think is much needed.”
Molycorp raised $414.2 million from bond and equity sales in January to
help fund completion of Mountain Pass. Molycorp expects capital expenditures
will be $450 million this year.
In a separate statement, Molycorp yesterday announced a five-year agreement
with Univar Inc. to sell Molycorp’s cerium-based water-treatment product to
municipal and industrial waste water treatment plants in North America.
Reproduced from an article that appeared in Bloomburg Businessweek
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