S&P: GrafTech outlook unchanged

Standard & Poor's said Wednesday that its ratings and outlook on GrafTech International Ltd. (B+/positive/--) remain unchanged, following a review precipitated by weaker-than-expected first quarter results and the company's 2004 revised earnings guidance.

Production problems at GrafTech's Brazilian facility and increased raw material and energy costs were primarily responsible for the weak results and earnings revision to a range of 55 cents to 75 cents per share from 60 cents to 75 cents per share for 2004.

S&P said that while increased costs are clearly a negative ratings factor for GrafTech, a producer of graphite and carbon electrodes, the magnitude of the increase does not warrant a change to the ratings or outlook at this time.

S&P still expects the company to be cash flow positive for 2004 and remain on track to reduce debt through cash flow and asset sales, as well as cost savings of $27 million and $20 million in 2004 and 2005, respectively. However, deviation from this expectation or further deterioration in expected credit metrics could result in an outlook revision as early as the second quarter of 2004.

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