Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeff Zekauskas – J.P. Morgan.
Jeff Zekauskas – J.P. Morgan
I wanted to start off with the lovely chart you gave us on rubber blacks profit before tax and I apologize if I'm asking just such a primitive question. If you add up the rubber black's business profit before tax excluding lags and LIFO for 2007 you get $104 million, and if you add up the numbers for 2008 excluding the lags you get $176, so why does it go from $104 to $176?
Patrick M. Prevost
I believe that the answer was partially embedded in the text of our press release, but I believe that we've been focusing very much on margin management over the last two years and we've also been very active at reducing our costs and what I'm going to do is I'm going to turn this now over to Bill Brady who will give you some more details on that.
William J. Brady
I think Patrick really hit the two key points. One is that we have focused very much on the margin management both in the contracted portion of our business and in the spot portion, and so I think our commercial team has made some excellent tradeoffs and has managed very well maximizing the margins, that’s one, and then on the other hand we have done both structural cost reductions, that is plant closures such as Ohio River, and remember we have added energy centers to our plants as well which has helped out structural costs.
In addition to that we have a strong operations excellence program which year-after-year continually takes costs out of the system and when you add all that up as you know there’s a lot of leverage in the business because of the volume and when you add all that up, it adds up to the numbers that you articulated.
Jeff Zekauskas – J.P. Morgan
So what this chart really shows is much of the internal progress that the company has made in I guess in making its operations more efficient. So if we what we do is we go to 2009, if the base business is earning at roughly $176 million, and you’re going to probably have some kind of positive effects from contract lags and LIFO, I guess to begin with the profits for this year should be, I don’t know order of magnitude above $200 million?
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