02.05.2012

Tough quarter for Harsco

Harsco Infrastructure has taken a $35 million restructuring charge as revenues slippped nine percent in the first quarter.

Infrastructure revenues were $238 million, compared to $262 million in the same quarter last year, while the operating loss increased from $17.5 million last year to $53.5 million this year. $35.5 million of this was due to restructuring costs, including redundancy payments and the cost of withdrawing from some businesses. Without these costs the loss was at a similar level to last year. The company says that it has a further $49 million of restructuring charges to take during the rest of the year.

Part of the cost is involved with reducing the company’s European exposure,
but it expects the Infrastructure business to move back into profit in the second half of the year.

The group as a whole saw revenues slip around four percent to $752.3 million, while last year’s pre-tax profit of $17.8 million turned into a loss of $24.8 million, due to the restructuring charge at Infrastructure, lower profits in its metals business and a substantially higher general corporate charge.

Harsco’s interim chief executive Henry Knueppel said: “Clearly we are not pleased with our overall operating results for the quarter. As we stated coming into this quarter it would be a difficult quarter and the low point for the year. Our key markets for Infrastructure and Metals actually trended worse than expected in the quarter.

“Fortunately, strong performances in our Rail and Industrial businesses and rigorous implementation of the previously announced restructuring actions allowed us to bridge the gap and meet our commitments. As we look at the second quarter we are seeing some recovery in our markets but not yet to the degree we expected as the year began. We do however expect significant incremental improvement over our first quarter results.”

Vertikal Comment

While this is not a good result for Harsco, you can sense a change in attitude in the way the business is being managed, or at least reported. Gone are the excuses and whinging about the infrastructure business, replaced by a matter of fact statement about the business and a relatively positive view on recovery beginning later this year.

If this quarter’s report is an indication of a new, less ‘corporate’ and less centralist approach within the company, then it bodes well for the future.