Zoltek reported net income of $3.3 million for the second quarter of fiscal 2013, which included a gain of $1.7 million from foreign currency transactions. In the second quarter of the prior year, Zoltek reported approximately the same net income ($3.3 million), but that included a loss of $1.9 million on foreign currency transactions.
The company’s operating income was $1.7 million in the latest quarter, compared to operating income of $5.7 million in the second quarter of fiscal 2012 and operating income of $3.6 million in the first quarter of the current year.
For the six months ended 31 March 2013, Zoltek reports net sales of $69.2 million, a decrease of $26.4% from the first six months of fiscal 2012. Operating income for the first half of fiscal 2013 was $5.4 million, compared to $13.9 million in the first half of fiscal 2012. Net income for the first six months of fiscal 2013 was $6.3 million, compared to $13.0 million in the first six months of the prior year.
Reduced activity in wind energy market
“Almost the entire decline in our sales in the first half of the year was the result of reduced activity in the wind energy market, which has negatively affected all industry participants – from the suppliers of glass and carbon fibres and other materials to the manufacturers of wind turbines,” says Zsolt Rumy, Chairman and CEO of Missouri, USA, headquartered Zoltek.
“This sudden decline in the industry is reflecting the pull-forward of orders into late 2012.”
Despite the sharp drop in the sales over the first half of the year, Rumy pointed out that Zoltek remained profitable in the second quarter – marking the 7 consecutive quarters of positive earnings for the company.
“We are a healthy company with a strong balance sheet,” Rumy said.
“We are disappointed with the sudden and (we believe) temporary drop in demand from new energy generation. Meanwhile, we continue to make solid progress in our long-term efforts to develop new applications for our low-cost carbon fibers in other fields – most especially automotive, consumer electronics, electrical transmission lines and pressure vessels which we expect to become a major new source of growth within the next two years and beyond.”
"Strategic alternatives"
Rumy also announced that although the company continues to hold quarterly investor conference calls, for the time being it is discontinuing the Q&A portion of the calls.
“As we announced on April 2nd, we are exploring and evaluating strategic alternatives to maximise shareholder value,” Rumy said. "The company does not intend to announce further developments regarding the process until the Board of Directors either completes its review or enters into a definitive agreement for a possible transaction." (See Zoltek hires financial advisor for strategic review.)
- Zoltek is under pressure from a group of shareholders named Quinpario Partners LLC which is demanding action to address what it calls Zoltek's "severe underperformance." (See Zoltek turns down request for shareholders meeting.)