POLYONE
Marginal sales growth and sharp earnings drop in 2007 / Further shift towards speciality compounding
Compounder and distributor PolyOne (Cleveland, Ohio / USA; www.polyone.com) grew sales only marginally by USD 20m to USD 2.64 bn (around EUR 1.93 bn) in 2007. The operating result plunged from USD 191m in 2006 to USD 34m, reflecting the ongoing extensive restructuring. Despite a pretax loss of USD 32m, a tax refund of USD 44m enabled the company to make a net profit of USD 11.4m.
A large part of the decline is attributed to the divestment of the stake in VCM and PVC producer OxyVinyls – see Plasteurope.com of 20.07.2007 – from which PolyOne drew earnings of just USD 1m in 2007, compared with USD 60m in 2006. The divestment has eliminated a “major source of earnings volatility,” according to management’s overview of the year’s highlights. The comprehensive but at times hard to interpret figures indicate that the proceeds of USD 261m were probably used mainly to repay a long-term debt of roughly the same amount. Alongside the impact of the OxyVinyls divestment, another significant downside item is a USD 49m charge for environmental remediation costs at disused sites.
CEO Stephen D. Newlin believes that the year’s performance confirms the strategic decision to focus on the Specialty Platform business. PolyOne aims to continue to expand the M.A. Hanna side of the business, for example, TPEs, masterbatches and speciality compounds, as a gradual counterbalance to the difficult PVC business it “inherited” as part of the spin-off from B.F. Goodrich. The restructuring of the North American distribution activities is also continuing.
The Vinyl division, which remained outside the scope of consolidation, posted sales of USD 950m (USD 1,044m in 2006) and is now just barely the company’s largest segment. This division’s gross trading profit was USD 92.5m (USD 115m). The Specialty Platform division lifted sales to USD 945m (USD 877m) and its gross trading profit to USD 153m (USD 127m), which backs up the CEO's statement. The distribution business generated sales of USD 744m (USD 733m), but only the operating result of USD 22.1m (USD 19.2m) is reported for this division.
The takeover of TPE specialist GLS Corporation, effective 2 January 2008 – see Plasteurope.com of 15.11.2007 – should increase the weighting of the specialities business this year. Sales are expected to rise by 10-12% over the year. Although the company hopes that sales will remain at last year's level, it points to the risks emanating from the mortgage credit crisis in the US and the unpredictability of raw material and energy costs.
e-Service:
Extensive press release by PolyOne on Q4 and full-year 2007 results as a PDF document (46 KB)
A large part of the decline is attributed to the divestment of the stake in VCM and PVC producer OxyVinyls – see Plasteurope.com of 20.07.2007 – from which PolyOne drew earnings of just USD 1m in 2007, compared with USD 60m in 2006. The divestment has eliminated a “major source of earnings volatility,” according to management’s overview of the year’s highlights. The comprehensive but at times hard to interpret figures indicate that the proceeds of USD 261m were probably used mainly to repay a long-term debt of roughly the same amount. Alongside the impact of the OxyVinyls divestment, another significant downside item is a USD 49m charge for environmental remediation costs at disused sites.
CEO Stephen D. Newlin believes that the year’s performance confirms the strategic decision to focus on the Specialty Platform business. PolyOne aims to continue to expand the M.A. Hanna side of the business, for example, TPEs, masterbatches and speciality compounds, as a gradual counterbalance to the difficult PVC business it “inherited” as part of the spin-off from B.F. Goodrich. The restructuring of the North American distribution activities is also continuing.
The Vinyl division, which remained outside the scope of consolidation, posted sales of USD 950m (USD 1,044m in 2006) and is now just barely the company’s largest segment. This division’s gross trading profit was USD 92.5m (USD 115m). The Specialty Platform division lifted sales to USD 945m (USD 877m) and its gross trading profit to USD 153m (USD 127m), which backs up the CEO's statement. The distribution business generated sales of USD 744m (USD 733m), but only the operating result of USD 22.1m (USD 19.2m) is reported for this division.
The takeover of TPE specialist GLS Corporation, effective 2 January 2008 – see Plasteurope.com of 15.11.2007 – should increase the weighting of the specialities business this year. Sales are expected to rise by 10-12% over the year. Although the company hopes that sales will remain at last year's level, it points to the risks emanating from the mortgage credit crisis in the US and the unpredictability of raw material and energy costs.
e-Service:
Extensive press release by PolyOne on Q4 and full-year 2007 results as a PDF document (46 KB)
15.02.2008 Plasteurope.com [210154]
Published on 15.02.2008
German version of this article...