UPDATE 1-FreightCar profit plummets, cites economy, costs
(Adds details of results, company comment on cost-cutting and expansion, stock action, CHICAGO dateline and byline)
By Nick Carey
CHICAGO, May 1 (Reuters) - U.S. rail car maker FreightCar America Inc (RAIL.O) on Thursday reported a sharp fall in first-quarter profit, citing the sluggish U.S. economy and rising costs, sending its shares down more than 10 percent.
The Chicago-based company said during the quarter it had resorted to forward purchasing of some materials to defray price increases, that it would seek other ways to cut costs and has begun exploring opportunities in the leasing sector of the rail car industry.
FreightCar also said it was looking to expand into fresh international markets beyond its current joint venture with India's Titagarth Wagons.
The company reported first-quarter net income of $1.1 million or 10 cents a share, a 95 percent drop from the $23.0 million or 80 cents a share it reported a year earlier.
Analysts had on average expected earnings per share for the quarter of 40 cents, according to Reuters Estimates.
Sales fell to $95.1 million from $322.5 million a year earlier, well short of the $124.0 million expected by analysts.
"In addition to the broad economic headwinds that have impacted the overall economy, the decreasing volume levels and pricing pressure in our industry have had a significant impact on our financial results for the quarter," Chief Executive Chris Ragot said in a statement.
The company, which announced in December it would close its Johnstown, Pennsylvania, plant with the loss of 390 jobs after failing to reach an agreement with the unionized work force on lowering labor costs, said it would increase efforts to cut costs "across all levels of the organization."
The plan to pre-purchase manufacturing materials hurt cash flow in the quarter, but Ragot said "we believe that this is more than offset by our improved competitive positioning in the current environment.
FreightCar also plans to broaden its product range and expand into the rail car refurbishment market.
In early trade on Nasdaq, FreightCar shares were down $3.84 or 10.0 percent at $34.56. (Reporting by Nick Carey, editing by Dave Zimmerman)
