Cabot Supermetals Business Grows 31% In June 2010 Quarter

Profitability in the Supermetals Business (which sells capacitor grade tantalum metal powder and wire for anode applications) increased by $11 million compared to the same quarter of fiscal 2009. The improvement was driven by stronger demand from ongoing recovery in the electronics industry that resulted in higher volumes, lower costs from actions taken over the past year to reposition the business and a benefit from lower ore costs associated with LIFO accounting. Sequentially, profit improved by $11 million due primarily to higher volumes associated with the electronics market recovery, higher prices, including an improved product mix, and lower operating costs. During the third quarter of fiscal 2010, the Supermetals Business generated $18 million of cash from improved operating results and reduced working capital.

Total revenues in the Cabot Supermetal’s Business were $47 million in the June 2010 quarter, up 31% from the March quarter when sales were only $36 million USD. This means that capacitor manufacturers had increased their demand and that price increases for raw materials had begun to take hold.

Cabot Supermetals Division Revenues By Quarter

Cabot Supermetals Division Revenues By Quarter

Cabot Corporation Supermetals Business sells capacitor grade tantalum metal powder, and would be the
largest vendor of such powders in the world. We can see from the chart above that Cabot has returned to sales levels that are consistent to pre-downturn levels. Cabot is prepared for any upturn in the industry, and is well positioned to increase market share as the tantalite ore supply becomes more difficult to manage in 2011. Based upon the tightening supply chain for tantalum, and Cabot’s large reserve of tantalite, the Supermetals Business should fare reasonably well in the September quarter.

Additional Resources: (1) Tantalum Capacitors: World Markets, Technologies & Opportunities: 2010-2015 ISBN # 1-893211-11-8 (© April 2010) (2) TANTALUM: Global Market Outlook: 2008-2013 ISBN # 0-929717-81-3 (2008)