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Cabot Anounces Second Quarter Results

Cabot Corporation announced its financial results for the second quarter of FY 2009 after the close of business today. For the quarter, Cabot reported net sales of $470 million and a net loss of $56 million (a loss of $0.90 per common share). Compared to the same period of fiscal 2008, Cabot’s Rubber Black volumes declined by 28% globally with decreases in all regions.  However, on a sequential quarter basis, volumes were flat with differing performance by region, with both North America and China showing sequential quarter volume growth of 12%. Volumes in South America were up 4%, while volumes in the Europe, Middle East, Africa region were up 1%. The worst performance was seen in Asia Pacific (excluding China), where volumes were down 22%. Rubber Blacks second quarter fiscal 2009 profitability decreased by $41 million when compared to the second quarter of fiscal 2008 driven principally by lower volumes from weak demand in the tire and automotive markets and lower unit margins from older, higher cost inventories.

The Performance Segment, which includes Performance Products (i.e., specialty blacks) as well as Fumed Metal Oxides, saw profitability decline by $33 million when compared to the second quarter of fiscal 2008, a result of lower volumes from weakness in the automotive, construction and electronics markets and lower unit margins from older, higher cost inventories.  When compared to the second quarter of fiscal 2008, volumes in Performance Products and Fumed Metal Oxides declined by 36% and 44%, respectively. As was the case in Rubber Blacks, however, Performance Product volumes grew by 10% on a sequential quarter basis, though Fumed Metal Oxides volumes were 18% lower due to substantial weakness in the electronics market.

Patrick Prevost, Cabot’s President and CEO, stated in a press release, “We have seen month to month improvements in our carbon black volumes since our December lows, although our results continue to be affected by the global weakness in the tire, automotive, and construction sectors.” He added that margins in the carbon black businesses were under pressure from higher cost inventories linked to slow volumes. Mr. Prevost also provided an update on the company’s restructuring efforts, announced last quater, stating, “On the cost side, our early efforts to respond to the economic downturn are bearing fruit, as we experienced a significant improvement in operating expenses. Separately, the restructuring we announced earlier in the year is proceeding as planned and we are on track to meet our objective of reducing fixed costs by at least $80 million on a fiscal 2010 run rate basis.

Cabot will hold its conference call discussing the results on Thursday, April 30, at 2:00 pm (ET).

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