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W.R. Grace Declines on Earnings Miss as European Weakens

W.R. Grace & Co., the chemical company that’s been under bankruptcy protection for 12 years, fell the most in nine months after quarterly earnings missed analysts’ estimates and full-year profit projections were reduced amid weakening European demand.

Grace declined 3.2 percent to $73.50 at the close in New York, the biggest drop since June 21. First-quarter earnings before interest and taxes was $104 million to $105 million, or 80 cents to 81 cents per share, excluding some items, Columbia, Maryland-based Grace said in a preliminary statement today. That trails the 87-cent average of six analysts’ estimates compiled by Bloomberg.

Grace also reduced its full-year profit forecasts, saying weaker-than-expected economic conditions in Europe are affecting sales growth. The unit that sells catalysts to oil refineries and chemical makers was affected in the first quarter by the loss of sales at four customers and delayed sales at another five, Grace said.

“Order timing and customer operational issues negatively impacted Grace refining catalysts franchise in the first quarter, and Europe is coming in weaker than expected,” Michael Sison, a Cleveland-based analyst at KeyBanc Capital Markets who recommends buying the shares, said in a note today.

Full-year earnings before interest and taxes will rise 4 percent to 8 percent to $540 million to $560 million, excluding some items, Grace said. That’s lower than a Feb. 6 forecast for $560 million to $580 million.

Net Income

Full results will be released April 24. The company won’t disclose the items excluded from adjusted earnings in the quarter or the full-year outlook until then, Rich Badmington, a Grace spokesman, said by phone today.

Net income in the first quarter was $52 million to $53 million a share, or 68 cents to 69 cents a share, Grace said. Net income a year earlier was $60.9 million, or 80 cents a share, according to data compiled by Bloomberg.

Grace filed for Chapter 11 bankruptcy protection in April 2001.

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