© Reuters. FILE PHOTO: A screen displays the logo for Corning Inc. at the New York Stock Exchange (NYSE) in New York, U.S., November 18, 2019. REUTERS/Brendan McDermid/File Photo
(Reuters) – Corning (NYSE:) on Tuesday forecast fourth-quarter core sales below market expectations and flagged a likely hit from the ongoing strike against the Detroit Three automakers, sending the shares of the specialty glass maker down nearly 3%.
The company expects core sales to be about $3.25 billion for the three months to December. Analysts were expecting $3.56 billion, according to LSEG data.
“Labor issues in the automotive industry could impact our automotive business more in the fourth quarter than it did in the third quarter,” CFO Edward Schlesinger said in an earnings call.
Corning supplies windscreens and emission control systems to the automotive industry and the strike comes as it grapples with slowing demand for its fiber cables from the telecom sector.
The optical communications unit, one of its main revenue generators, saw net sales fall by nearly a third as carriers worked through inventory.
“Our markets continue to reflect demand below trend lines,” CEO Wendell Weeks said, adding demand is expected to bounce back in the second half of 2024.
Core earnings forecast for the fourth quarter of between 37 cents and 42 cents per share was also below estimates of 50 cents.
The specialty materials business, which includes the Gorilla Glass used in smartphones made by Samsung (KS:) and Apple (NASDAQ:), was a bright spot. Revenue climbed about 8%, largely due to the launch of the iPhone 15.
The Environmental Technologies segment, which produces filters for emission control systems, posted a 6% increase in net sales as demand from China helped offset softness in heavy-duty markets in North America.
Core sales fell by about 6% to $3.46 billion in the third quarter, missing estimates of $3.50 billion. Adjusted profit of 45 cents per share also fell short of estimate of 47 cents.
Meanwhile, core gross margin improved by 90 basis points to 37%, as Corning aggressively cut costs and hiked prices by about 20% over the past quarters.
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