Renewal Contract for Harsco

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Recently announced, Zeeland Refinery N.V. renewed its contract with Harsco Corporation (HSC) with an award of nearly $30 million pertaining to a total time period of five years. Harsco will provide its 24/7 onsite access and insulation services to the oil refinery plant.

As per the agreement, Harsco shall cater to mainly offering its plant repair and insulation management solutions. However, it’s scaffolding solution services shall also provide for flexible work environments along with the regular insulation controlling operations.

Management expressed its alacrity on the venture by stating that Harsco has earned a reputation for developing quite a safe working environment at such plants with its credible supplier status. This renowned goodwill of the firm evidently leads to the interminable spree of prestigious contract wins and extensions.

It is, however, noteworthy that the company’s Infrastructure segment failed to impress us with its performance in the first quarter of 2012. Bearing onuses from the weakened UK economy, sales dropped 9% annually and slid to $238 million at the end of the quarter. Operating margin also deteriorated heavily due to the weakened European market. We can, nevertheless, be hopeful of a better upcoming quarter for the segment with the panegyrics of such contract wins highlighting the present scenario.

Various restructuring activities are being undertaken by management to ameliorate yields. Moreover, several product innovation strategies and market expansion advances allow the company to be perspicacious of a strong performance from the Infrastructure segment in its upcoming second quarter of 2012.

Harsco, however, should be wary of some big players in the industry it pertains to. Ominous rivals in this regard include W.W. Grainger, Inc. (GWW), TMS International Corporation (TMS) and Aggreko Plc (ARGKF).

The company currently retains a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. We also have an ‘Underperform’ recommendation on the company’s stock.

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