October 26, 2009 / 12:21 PM / 10 years ago

UPDATE 3-General Cable Q3 beats; shares fall on Q4 outlook

* Q3 adj EPS $0.55 vs est $0.53

* Sees Q4 EPS $0.20-$0.30 vs $0.52 yr-ago

* Q4 hurt by weak demand, rising metal prices

* Says to cut production further in Q4

* Shares fall 13 pct (Adds analyst comments, updates share movement)

By Bijoy Anandoth Koyitty

BANGALORE, Oct 26 (Reuters) - General Cable Corp’s BGC.N quarterly profit beat market expectations mainly due to lower expenses, but the fiber optic and copper wire maker forecast a drop in fourth-quarter earnings, sending its shares down 13 percent.

Weak demand and rising metal prices will force the company to reduce production further in the fourth quarter, which in turn will hurt quarterly earnings, General Cable warned in its statement.

“Copper prices continue to move and they are kind of trying to adjust to an ever-moving target,” Longbow Research analyst Shawn Harrison said by phone.

Prices for copper HGZ9 have more than doubled this year, fuelled by government-led growth in China, as well as a weaker dollar, which makes the metal cheaper for some non-U.S. buyers.

The recovery tool for the company is to raise its prices, but the adverse market conditions are working against it, Harrison said.

General Cable, which competes with Belden (BDC.N), France’s Nexans (NEXS.PA), German-listed Leoni (LEOGn.DE) and Dutch cable manufacturer Draka DRAK.AS, manufactures and installs copper, aluminum and fiber optic wire and cable products.

The company expects difficult conditions to prevail for its business in North America, as weak pricing and flat to slightly declining volumes continue to pressure earnings, Chief Executive Gregory Kenny said on a conference call with analysts.

For the fourth quarter, the company expects earnings of 20 cents to 30 cents a share, before the impact of non-cash convertible interest expense, compared with earnings of 52 cents a share in the year-ago period.

General Cable forecast revenue of about $1.05 billion to $1.10 billion for the fourth quarter.

Analysts on average were expecting earnings of 57 cents a share, before items, on revenue of $1.05 billion, according to Thomson Reuters I/B/E/S.

For the third quarter, the company reported earnings of $16.4 million, or 31 cents a share, compared with earnings of $50.5 million, or 94 cents a share, a year ago.

Excluding items, it earned 55 cents a share.

Net sales fell 25 percent to $1.08 billion.

Analysts on average were expecting earnings of 53 cents a share, before items, on revenue of $1.07 billion.

Shares of the company, which have gained 61 percent in value over the last six months, were down 9 percent at $35.05 in midday trade on the New York Stock Exchange. They touched a low of $33.51 earlier. (Reporting by Bijoy Koyitty in Bangalore; Editing by Himani Sarkar, Ratul Ray Chaudhuri)

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