21 October 2008 15:05 [Source: ICIS news]
TORONTO (ICIS new)--A. Schulman’s fourth-quarter net income for the three months ended 31 August dropped 44.7% to $4.7m (€3.5m), down from $8.5m a year earlier, while sales rose 6.7%, the US producer of high-performance plastic compounds and resins said on Tuesday.
The company also warned that North American markets were expected to remain weak through fiscal 2009 and said it was concerned about softening European markets.
Net income included significant restructuring and impairment charges but also benefited from favourable currency effects, Schulman said.
Sales were $495.9m, compared with $464.6m in the 2007 fourth quarter, on the back of currency translation effects, primarily the euro, and changes in prices and product mix, the company said.
The company reported tonnage down 11.7%, primarily because it said that its North America engineered plastics unit declined due to the sale of a low-margin tolling business in
Gross profit improved year on year to $60.6m, or 12.2% of net sales, from $55.0m, or 11.8% of net sales, the company said.
The primary drivers of the increase in gross profit were foreign exchange and European growth, which were partially offset by weakness in Schulman’s North American polybatch and engineered plastics businesses, the company said.
Improvements in product mix, pricing initiatives and cost reductions allowed Schulman to increase margins despite the challenging economic environment and volume declines, it said.
"We are encouraged by our ability to achieve margin improvements during these challenging economic times, due to our cost reductions and product mix and pricing initiatives,” said CEO Joseph Gingo.
“We also gained significant benefits from improved working capital management, which dramatically increased our operating cash flows."
Meanwhile, Schulman was continuing its review of strategic options for the company, including its sale, Gingo said.
Schulman had received a tentative purchase offer during the summer but rejected the bid as it was too low, he added.
($1 = €0.75)
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