Union Carbide Stock Takes Hit After Earnings Update

Union Carbide Corp.’s shares fell 8 percent after it said third-quarter profit will be squeezed by higher raw-materials costs and lower prices for products such as plastic resins.

Union Carbide said late Thursday that earnings will be below analyst forecasts and “somewhat above” last year’s $1.08 a fully diluted share. The company was expected to earn $1.33 a fully diluted share, according to IBES International Inc.

Earnings will be hurt by higher prices for natural gas products, which Union Carbide uses to make the building blocks of trash bags, rugs and other materials. Natural gas futures rose 46 percent since last September amid concern that U.S. supplies are low as the cold season approaches, analysts said. The company had earnings disappointments in three of the past six quarters.

“Chemical companies aren’t that predictable,” said Morgan Stanley Dean Witter analyst Leslie Ravitz. “The weather for Union Carbide gets rough from here on in.”

Union Carbide shares fell 4-1/16 to 49-9/16 in trading of 2.46 million, more than six times the three-month daily average of 388,700. Earlier, shares touched 48-1/8.

Union Carbide said in its basic chemicals and polymers business, higher prices for ethylene glycol failed to offset costs related to raw materials and lower-than-expected prices for polyethylene and polypropylene. Ethylene glycol is used in antifreeze, while the other two chemicals are plastic resins.

The company said operating profit for the business should be higher than the $101 million reported in the second quarter. A year ago, specialty chemicals and intermediates had an operating profit of $202 million on sales of $1.06 billion. The division accounts for about 70 percent of the company’s sales.

Some of the stocks that moved substantially or traded heavily Friday on the New York Stock Exchange, Nasdaq Stock Market and American Stock Exchange.

NYSE

Gillette, up 3-15/16 at 88-11/16 , The Boston-based consumer-goods giant announced plans to re-purchase up to 25 million shares, or about 4.5 percent of its outstanding stock, over the next two years.

First Union, up 2-1/8 at 50-1/2

An offering of the 52.2 million First Union shares was priced at $48.375 each. About 44.7 million of the shares were being sold by Banco Santander of Spain.

American Radio Systems, down 3-15/16 at 47-15/16

CBS owner Westinghouse Electric agreed to buy Boston-based American Radio for $44 a share, or $1.6 billion. American Radio, the nation’s fifth-largest radio company, owns or is buying 98 stations, which will bring Pittsburgh-based Westinghouse’s total to 175.

Sterling Electronics, up 2-1/4 at 20-5/16

Marshall Industries of El Monte, Calif., agreed to pay $21 a share, or about $162 million, to acquire Houston-based Sterling, a rival electronic-components distributor.

Flowserve, down 2-15/16 at 30-13/16

The supplier of industrial technology expects to post third-quarter earnings below year-ago levels. Flowserve, based in Long Beach, Calif., was formed in July by the merger of BW/IP and Durco International.

NASDAQ

Periphonics, down 2-1/2 at 11-1/4

The maker of interactive voice response systems reported disappointing results for its first quarter ended Aug. 31. Periphonics, based in Bohemia, N.Y., cited disappointing domestic sales.

QLT PhotoTherapeutics, down 3 at 16-7/8

An FDA panel recommended approval of the drugmaker’s Photofrin for treating some lung cancer patients. However, the committee also voiced serious concerns about the way trials had been conducted and voted not to recommend the drug for certain uses.