Georgia Gulf shares plunge after company posts wider 1Q loss
NEW YORK—Shares of Georgia Gulf Corp. lost a fourth of their value Wednesday after the maker of chemicals and home-improvement products said its first-quarter loss doubled because of difficult market conditions and harsh weather in Canada and the northeastern U.S.
The stock tumbled $1.40, or 23.5 percent, to $4.55.
Atlanta-based Georgia Gulf said its loss for the quarter ending March 31 widened to $69.5 million, or $2.02 per share, from $34.6 million, or $1.01 per share a year ago.
Excluding one-time costs from the closure of an Oklahoma City resin plant, the company lost $1.44 per share. Sales shrunk to $712.5 million from $713.7 million.
The loss was much larger than analysts expected, with analysts polled by Thomson Financial predicting a loss of 38 cents per share, on average. Such estimates typically exclude one-time charges.
The company also said it planned to pay down at least $125 million in long-term debt in 2008 from sales of noncore assets, tax refunds, cash and spending cuts.
Citi Investment Research analyst P.J. Juvekar called the results "dire" in a note to investors and downgraded shares of Georgia Gulf to "Sell" from "Hold."
"Given the tightening credit conditions in the economy, the chances of financial difficulties have risen, especially if the economy takes a turn for the worse," Juvekar said.
He also slashed his price target in half to $3, implying he expects the stock to contract by nearly 50 percent.
Separately, Banc of America Securities analyst Kevin W. McCarthy called the period "perhaps the most challenging quarter in Georgia Gulf's history," noting it missed estimates across multiple segments. Total debt, meanwhile, rose $22 million to $1.4 billion, he pointed out.
McCarthy left his "Neutral" rating and $8 price target unchanged.
Shares of Georgia Gulf have lost nearly three-fourths of their value from a 52-week high of $21.36 in July.
