Recent many years have seen an improve during the production capabilities of straightforward chemical producers; they're the firms which provide raw materials to Engelhard. It can thus be anticipated that the business will see a downturn in raw materials pricing, which ought to increase the profit margin enjoyed by the company, but that increase just isn't most likely to happen for numerous additional quarters (Coyle 496). Competition in this industry is also intense as contracts with companies such as Ford and other big manufacturers is also worth hundreds of millions. Being a result, the competition is possibly to take in advantage of any opportunities that Engelhard gives it. Engelhard has been especially successful in its automotive emission catalysts, boosting sales for the second quarter of 1997 by 14 percent over the same period in 1996.
The business was in a position to do this as a result of its powerful presence with both American and European automotive manufacturers based on big component on new and highly sophisticated technology ("Engelhard Revs Up" 5). The powerful performance in this marketplace sector is essential since the business faced severe difficulties just one year ago when it faced criticism more than its potential to bring the technology effectively to market. The company's stock elevated 40 percent, then dropped 30 percent and then recovered towards mid#20s during the space of 18 months ("Engelhard Corp." 3).
This volatility, as well as the awareness in the industry to the These considerations offer the expectation that the business will do well in coming years, but is not probably to appreciate short#term cost increases. This really is since the marketplace is probably to wait to see regardless of whether the business is able to profitably use its a lot more ability and regardless of whether it can profitably open up overseas markets. Engelhard's past history suggests that it will indeed be in a position to reap powerful benefits from its planned strategy, which creates this stock attractive for long-term holdings. The company's financial performance is greatest illustrated by its relationship of sales to profits for your past five and ten years.
During the past ten years, revenues increased at an average annual rate of one percent per year though revenue elevated at an average annual rate of 8.5 percent per year. During the past five years, sales elevated at an annual rate of 2.5 percent though income increased at an annual rate of 14.5 percent. These figures show how the company is successfully managing its operations since it is in a position to post income growth which strongly outpace earnings growth (Mitkowski 502).
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