Europe adhesives market conditions remains weak: HB Fuller

27 June 2013 20:47  [Source: ICIS news]

HOUSTON (ICIS)--End-market conditions for adhesives remains weak in Europe, especially in the southern tier of the continent, the CEO of US-based producer HB Fuller said on Thursday.

The region was the only global area in which the adhesives and specialty chemicals producer experienced a decline in year-over-year volume, said James Owens, who made his comments during a conference call over HB Fuller’s Q2 earnings.

“Several of our key durable assembly markets – for example, woodworking – are weak as consumer discretionary spending is constrained,” Owens said of Europe.

On Wednesday, HB Fuller posted a more than twelvefold increase in year-on-year net income, thanks to a more than 500% increase in income from continuing operations. Last year’s Q2 net income was muted by the company’s acquisition of Swiss-based adhesive maker Forbo.

Organic revenue in Q2 2013 fell about 1% year over year, a decline Owens attributed to weak sales in Europe and “continued planned attrition of the Forbo revenue”.

The attrition comes from product line rationalisation, repositioning and changes in organisation in Europe, he said.

Despite weakness in Europe, HB Fuller continues to show solid sales growth in India, the Middle East and Africa – especially in the company’s core hygiene market – but the growth is lower than in previous quarters, Owens said.

North America posted steady organic revenue growth in Q2 thanks to the home construction rebound, he said.

Adhesive sales in North and Latin Americas were subdued with slight declines year over year, Owens said.

Asia is a mixed bag for the company, with China showing sold organic growth, southeast Asia sales increasing modestly and Australian business flat, Owens said.

HB Fuller expects better sales growth in the second half of the year as the company shifts away from business integration work toward attracting new business, he said.

By: Jeremy Pafford
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