Operating income in fiscal 2009’s second quarter was $2.1 million, compared to $8.3 million in the year-ago quarter, a decrease of 75%. Zoltek’s net income for the second quarter of fiscal 2009 was $0.5 million, compared to $4.3 million in the year-ago quarter.
For the first half of fiscal 2009, Zoltek’s net sales were $74.6 million, compared to $89.7 million in the year-ago period, a decrease of 17%. Operating income was $5.5 million for the first half of fiscal 2009, compared to $13.1 million in the year-ago period, a decrease of 58%. Zoltek reported net income of $1.0 million for the first half of fiscal 2009, compared to net income of $6.9 million in the year-ago period.
“After four years of strong consistent growth in revenues and profitability, we are disappointed with Zoltek’s performance through the first six months of 2009, said Zsolt Rumy, Zoltek’s chairman and chief executive officer. It is unfortunate that the global economic downturn has affected our industry and interrupted the momentum of our revenue growth just when we took a quantum leap in increasing our ability to serve the needs of the current and potential new users of commercial carbon fibers with the addition of our Mexican facility for precursor and carbon fiber production. However, we firmly believe this situation is no more than temporary – and by no means represents a permanent change in our business prospect or our outlook.
Based on Zoltek’s marketing activities, including recent participation in two global conferences – on wind energy and advanced composites – Rumy added, As bad as this year has been so far, there is a strong consensus within the industry that the fundamentals for resumption of historical growth trends as soon as next year are as strong as ever – given carbon fiber’s position as the key enabling material in reaching new levels of performance in wind energy, automobiles, deep-sea drilling and other application areas. In the case of wind power, which we believe offers the most imminent potential for additional growth, the uncertainty of the financial support by the U.S. government has negatively affected the industry. New wind farm activity has slowed as developers, wind turbine equipment manufacturers and their financing sources are waiting to see what government benefits can be expected. Although project cancellations are very uncommon, a number of them are on hold until the economic uncertainties are cleared up.
Rumy noted that as a part of the global economic situation Zoltek’s revenues in the first half of the year were adversely affected by the Euro’s decline against the dollar and by falling energy and raw material costs that were passed along to customers as price reductions. The costs associated with the start-up of Zoltek’s recently acquired Mexican facility were also a factor in causing the company’s gross profit to decline to $9.1 million in the second quarter of fiscal 2009 from $14.0 million in the second quarter of fiscal 2008.
Even in this unexpected global downturn that we are experiencing today, Zoltek continues to be profitable, reduce our long-term debt and produce positive cash flow from operations, Rumy said. We have the ability to ride out the current storm as we continue to actively pursue new orders and prepare for the strong growth that we believe is sure to follow.
We have the confidence of knowing that governments and public utilities around the world are united in wanting to make wind energy a much bigger part of the overall energy mix. Wind energy is the only renewable energy, particularly the large turbines which are using carbon fiber-reinforced blades, that economically competes with fossil fuels in generating electricity. We also have every confidence that growth in existing markets and developments in automotive field and deep sea drilling will generate huge new demands for our carbon fibers. The revolution in building materials based on carbon fibers is real and it will continue not just for years, but for decades.
