A. SCHULMAN
Q1 2016 results hit by quality issues at Lucent plants / More cost cuts to be made / Citadel boosts revenues
Fiscal 2016 first-quarter results at US compounder and distributor A. Schulman (Akron, Ohio; www.aschulman.com) have been hit by costs totalling USD 4.9m from a quality reporting matter related to Lucent Polymers, once part of Citadel Plastics which was acquired last year – see Plasteurope.com of 08.06.2015. Discrepancies were identified at two former Citadel manufacturing facilities between laboratory data and certifications provided to customers by Lucent relating to certain products using recycled or reclaimed raw materials.
Nonetheless, profits and net sales improved in the quarter ending 30 November 2015, boosted by Citadel, which contributed USD 111.1m of revenue. Adjusted operating income rose by 35% to USD 37.8m, compared with USD 40.1m the year before. Consolidated net sales were 5.6% higher at USD 649.2m.
In Europe, the Middle East & Africa (EMEA), legacy revenues were essentially unchanged from fourth-quarter 2015 results but net sales dropped by 11.6% to USD 328.1m. The US and Canada benefited from USD 59.1m of revenue from Citadel with net sales of USD 178.3m, a 23.2% increase from the previous year. However, legacy revenues fell by 17.6%. A. Schulman said revenue and volume weakness in the region’s Masterbatch and Specialty Powders businesses were mainly driven by certain tolling customers destocking and shifting some production in-house.
Market expansion and operational improvements in Latin America boosted gross profits by roughly 72% year-on-year to USD 9.7m, although net sales were 2.1% lower at USD 45.2m. Strategic initiatives to improve product mix in Asia Pacific increased gross profits to USD 7.9m from USD 7.3m the prior year. Net sales were USD 45.7m, down by 13.7% year-on-year.
Looking ahead, president and CEO Bernard Rzepka said: “Fiscal 2016 has begun on a challenging note, with weakening macroeconomic conditions across several regions, continued pressure in the oil, energy and material markets, ongoing currency headwinds and the costs of our internal actions to resolve the Lucent matter. To that end, we are undertaking additional cost reduction actions company-wide, designed to more than offset the first-quarter shortfall.”
Nonetheless, profits and net sales improved in the quarter ending 30 November 2015, boosted by Citadel, which contributed USD 111.1m of revenue. Adjusted operating income rose by 35% to USD 37.8m, compared with USD 40.1m the year before. Consolidated net sales were 5.6% higher at USD 649.2m.
In Europe, the Middle East & Africa (EMEA), legacy revenues were essentially unchanged from fourth-quarter 2015 results but net sales dropped by 11.6% to USD 328.1m. The US and Canada benefited from USD 59.1m of revenue from Citadel with net sales of USD 178.3m, a 23.2% increase from the previous year. However, legacy revenues fell by 17.6%. A. Schulman said revenue and volume weakness in the region’s Masterbatch and Specialty Powders businesses were mainly driven by certain tolling customers destocking and shifting some production in-house.
Market expansion and operational improvements in Latin America boosted gross profits by roughly 72% year-on-year to USD 9.7m, although net sales were 2.1% lower at USD 45.2m. Strategic initiatives to improve product mix in Asia Pacific increased gross profits to USD 7.9m from USD 7.3m the prior year. Net sales were USD 45.7m, down by 13.7% year-on-year.
Looking ahead, president and CEO Bernard Rzepka said: “Fiscal 2016 has begun on a challenging note, with weakening macroeconomic conditions across several regions, continued pressure in the oil, energy and material markets, ongoing currency headwinds and the costs of our internal actions to resolve the Lucent matter. To that end, we are undertaking additional cost reduction actions company-wide, designed to more than offset the first-quarter shortfall.”
15.01.2016 Plasteurope.com [233100-0]
Published on 15.01.2016
German version of this article...