KMG Chemicals expects significant improved profits in 2009

KMG Chemicals, Inc. (Nasdaq:KMGB) CEO J. Neal Butler said there are a number of reasons the specialty chemicals maker expects improved profits in fiscal 2009. Butler made the comments during a midday conference call.

“Our electronic chemicals business will be consolidated for the entire fiscal year. We have successfully secured new and profitable business from several major global customers since completing the acquisition and we are currently bidding on new business in the Pacific Rim,” Butler said. “We don’t know at this point if we will be successful, but we have been invited by several key semiconductor producers in Asia to participate in their request for quotes.”

The chief executive said the firm has also raised prices, which should help offset rising raw material expenses.

The Houston-based company said it expects improved results in 2009 with anticipated sales of about $200 million and a “significantly improved profit picture.” Wall Street analysts project earnings of $1.12 per share on sales of $187.2 million during fiscal 2009.

In a press release issued before Wednesday’s opening, KMG said it expects fourth-quarter earnings to be “significantly better” than the year-ago results, when the company earned $0.18 a share.

Because of lower-than-expected earnings during the third quarter, KMG said it projects a 10% to 20% decline in year-over-year earnings for 2008. The projection translates to earnings of between $0.64 and $0.72 a share during the fiscal year ending in July. Wall Street analysts, on average, expect yearly earnings of $0.77 a share.

KMG reported early Wednesday that its third-quarter profit fell 55% to $1.7 million, or $0.15 per share, versus $3.8 million, or $0.34 per share, a year earlier. The quarterly net income missed Wall Street’s expectation of earning $0.22 per share.

Net sales for the three months ended April 30 plunged 88% to $50.3 million . . .

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