08 January 2010 18:11 [Source: ICIS news]
TORONTO (ICIS news)--US plastics compounds and resins firm A Schulman is confident its engineered plastics business will cope even after the expiry of auto industry incentives in the US and Europe, which may have caused a “bubble”, it said on Friday.
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“Right now, we think it is too soon to tell if we have a bubble effect in our global engineered plastics business, or how much this could be,” DeSantis said.
The European incentives targeted small, fuel-efficient cars, a market that was not Schulman’s “sweet spot,” and as such the majority of the company’s auto-related European engineered plastics business did not benefit, DeSantis said.
But even with the incentives now no longer available, Schulman was confident about the prospects of the plastics business as it had been reducing its dependency on automotive markets, chief executive Joseph Gingo said.
Schulman had cut exposed capacities, particularly in
In the quarter ended 30 November, only 13% of Schulman’s total sales were auto related, compared with 14% in the year-earlier quarter.
At the same time, a lot of Schulman’s automotive niche businesses remained “extremely profitable,” Gingo added.
Gingo also said Schulman would, given the opportunity, make another acquisition, following its $191m (€134m) deal in December to buy Houston-based specialty resin producer ICO.
However, with the uncertain economic outlook, Schulman remained cautious and would not “make an acquisition to make an acquisition,” he said.
The company earlier this week posted fiscal 2010 first-quarter net earnings of $17.0m, up 107% from $8.2m in the year-ago quarter.
It cited cost reduction initiatives, purchasing savings and a better product mix for the improvement, as well as a bubble effect from the incentives.
($1 = €0.70)
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