NEW YORK (AP) -- Shares of Koppers Holdings, which produces carbon compounds and wood treatment products, fell Tuesday as the company lowered its second-quarter adjusted earnings forecast.
THE SPARK: Koppers now foresees second-quarter adjusted earnings between 66 cents and 70 cents per share. Its prior guidance was for about $1 per share. Analysts polled by FactSet predict earnings of 81 cents per share.
The company also said that it expects its full-year adjusted earnings will be lower than 2012's adjusted earnings of $3.27 per share, but it did not give a specific per share figure. Analysts expect earnings of $3.01 per share.
THE BACKGROUND: The Pittsburgh company said that prices on certain products were lower than expected due to weak economic conditions in Europe and that demand was fluctuating. Koppers also said that volumes and prices for phthalic anhydride, carbon pitch and creosote in North America were hurt by cheaper European imports. In addition, bad weather in the eastern U.S. lowered demand for some seasonal products in the carbon materials and chemicals business. And unplanned production outages and delays in some customer orders due to anticipated price cuts hurt phthalic anhydride volumes.
President and CEO Walter Turner said in a statement that 2013's second half is expected to be better than the first half, as Koppers works on various ways to lower costs and improve profitability.
The company expects to report its second-quarter financial results on Aug. 8.
THE ANALYSIS: Liam Burke of Janney Capital Markets said in a client note that European aluminum production is down for the year to date, which caused Koppers to feel pricing pressure while it dealt with softer demand. While overall production of aluminum is up year over year, Burke said that overall pricing is down which is making for more competitive pricing among carbon pitch providers.
The analyst lowered Koppers price target to $45 from $52 but maintained a "Buy" rating.
A representative for Koppers did not immediately respond to an email seeking comment.
SHARE ACTION: Koppers Holdings Inc.'s stock dropped $3.32, or 8.4 percent, to $36.32 in midday trading Tuesday. Over the past year, the stock has traded in a range of $29.30 to $46.48. Year to date, the shares are up 4 percent.