April 21, 2008 / 9:38 PM / in 10 years

UPDATE 1-Albemarle 1st-quarter profit climbs

(Adds details on results, outlook, analyst estimates)

NEW YORK, April 21 (Reuters) - Specialty chemicals maker Albemarle Corp (ALB.N) said on Monday its first-quarter earnings rose, as strong results from its catalysts business offset the impact of cost pressures in its other segments.

Its catalysts are used by refiners, and the company said it expects oil demand to remain strong and that it has the catalyst production capacity to meet growing demand in 2008 and 2009.

Net income in the quarter was $63.3 million, or 68 cents a share, compared with a year-ago profit of $58.1 million, or 60 cents a share. Excluding items, the company posted earnings of 70 cents a share, up from 60 cents a share a year earlier.

Quarterly sales rose 13 percent to $668.2 million, spurred primarily by strong sales from its polymer additives and catalysts units.

Analysts, on average, had expected earnings of 66 cents a share on revenue of $652.3 million, according to Reuters Estimates.

Earlier on Monday, Goldman Sachs upgraded Albemarle to “buy” from “neutral,” saying its depressed valuation represents an unwarranted discount to the small-cap peer group.

    The brokerage firm raised its price target by $8 to $50, while adding that the market was neither fully crediting Albemarle for the robust and defensive trends in catalysts, nor the margin improvement opportunities in fine chemicals.

    The company said it was increasing its presence in China with expansions underway that will help it grow its flame retardants, antioxidants and fine chemicals businesses in 2008.

    But Albemarle said its operating margins are under pressure in all businesses due to dramatic inflation in raw materials and energy costs. Albemarle said it continues to work with its customer base to pass on the rapidly escalating costs.

    Albemarle shares are up 7.6 percent in the last three months and closed at $39 on Monday on the New York Stock Exchange. (Reporting by Euan Rocha, with additional reporting by Aditi Samajpati in Bangalore; Editing by Braden Reddall)

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