Water treatment services company Nalco Holding Co. said it will continue to be hit by higher raw material prices in the first half of 2011.
Naperville, Illinois-based Nalco, which forecast weak earnings for 2011 on Tuesday, saw its shares fall 11 percent to $27.63 on Wednesday — their lowest in three months.
“I think it is to be determined to what extent the company will be able to recover the increase in raw material prices, as a consequence the stock is under pressure,” analyst David Rose of Wedbush Securities said.
Raw material prices have spiked across the board as the improving global economy prompts companies to ramp up production after two years of subdued growth following the economic downturn.
“There is a lot of uncertainty in the world, a lot of volatility, but we have to assume that they (raw material prices) are going to stay or increase from these levels and deal with it accordingly, and that’s what we’re doing,” Chief Executive Erik Fyrwald said on a call with analysts.
