14 October 2011 15:39 [Source: ICIS news]
HOUSTON (ICIS)--A Schulman expects to beat its fiscal 2011 profit guidance because of an unexpected strength in volumes and improved margins in its fiscal fourth quarter, the US-based plastics compounder said on Friday.
However, the company also warned that those favourable volume and margin trends may not be sustainable going forward, given the current uncertainty in global markets.
Based on preliminary results, A Schulman now expects to report adjusted net income of about $58m (€42m) for its fiscal year ended 31 August 2011, compared with its earlier guidance of $50m-$52m of adjusted net income, it said.
“An unanticipated volume improvement in the European distribution business occurred late in the [fiscal] fourth quarter, which the company believes was the result of increased buying patterns by customers in anticipation of rising raw material prices,” the company said.
At the same time, Schulman saw “unanticipated general margin expansion” across all of its businesses, it added.
In addition to those factors, A Schulman’s fiscal year will benefit from “favourable tax adjustments,” it said.
“Operationally, we are pleased that we now anticipate stronger results that will exceed our expectations for the fiscal 2011 fourth quarter and full year," said CEO Joseph Gingo.
“However, the lack of stability in global markets is making forward-looking projections into 2012 very difficult,” he added.
While this latest boost in margin will contribute to better results for the fiscal year, the company is not convinced that this favourable trend is sustainable, given the current unpredictability of global markets, Gingo said.
Schulman plans to release its fiscal 2011 fourth-quarter and full-year results on 26 October.
($1 = €0.72)
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