PARMA, Ohio (AP) -- GrafTech International Ltd., which makes electrodes for the steel industry and other products, said Thursday that its fourth-quarter profit dropped 22 percent, despite a jump in sales, because of changes in how it accounts for pension and retirement benefit plans.
The company's adjusted profit of 31 cents, which excludes the effect of the pension change, matched Wall Street predictions. But GrafTech warned that the weak European economy and the slowdown in the solar sector are hurting its business. The company expects lower sales volumes of a key product to European customers in the steel industry this year.
Shares of GrafTech tumbled $1.99, or 13 percent, to $13.43 in midday trading.
For the quarter ended Dec. 31, the Parma, Ohio-based company earned $57.1 million, or 39 cents per share, down from $72.9 million, or 56 cents per share, in the same three months in 2010.
Revenue rose 24 percent to $348 million from $281.2 million, as sales of industrial materials increased 26 percent to $297 million.
GrafTech said that several of its European steel-producing customers cut production during the fourth quarter and are expected to continue to do so this year, given the tough economic climate in Europe. That suggests that they'll scale back on reordering materials from GrafTech, hurting the company's industrial materials division, the bulk of its revenue. The company also said that the slowdown in Europe and in the solar sector is hurting its smaller engineered solutions unit.
Europe has accounted for about 30 percent of GrafTech's annual sales, the company said. GrafTech added that it doesn't expect the solar industry to recover until later this year or 2013.
For the full year 2011, GrafTech earned $153.2 million, or $1.05 per share, down from $174.7 million, or $1.41 per share, in 2010. Revenue rose to $1.32 billion from $1.01 billion.