Business News
PolyOne Updates First-quarter 2008 Outlook
Tuesday 25. March 2008 - PolyOne Corporation (NYSE: POL) today updated its outlook for the first quarter ending March 31, 2008.
The Company expects first quarter consolidated sales to increase 9% to 11% compared with the first quarter of 2007. Demand is expected to weaken in the later portion of the quarter as the North American economic downturn is impacting other industrial end markets beyond automotive and building and residential construction, such as wire and cable.
Aggregate sales for PolyOne’s Specialty businesses, including sales from the recently acquired GLS Corporation, are projected to grow nearly 25% in the quarter compared with the first quarter of 2007. GLS was acquired in January 2008 and represents approximately 14% of the Specialty growth. PolyOne’s Specialty businesses consist of: International Color and Engineered Materials, Specialty Engineered Materials (which includes the results of GLS), North American Color and Additives, and Specialty Inks and Polymer Systems. Operating income in the aggregate for these businesses is projected to grow significantly from the same period a year ago, reflecting stronger profit margins across this increased sales base. The Company anticipates that International segment sales and operating income in the first quarter would continue to demonstrate double-digit growth compared to a year ago. This anticipated solid performance by the Specialty businesses underpins PolyOne’s strategic portfolio transformation.
For PolyOne Distribution, the Company anticipates meaningful increases in both sales and operating income during the first quarter of 2008 compared with the first quarter of 2007.
First-quarter sales for the Company’s Vinyl Business segment are expected to decline 2% to 4% compared with the first quarter of 2007. Vinyl Business segment earnings are anticipated to be substantially below first quarter of 2007 levels, due to a combination of lower demand and margin pressure caused by higher raw material and energy costs not fully offset by increased pricing.
Resin and Intermediates segment earnings are projected to increase slightly compared with a year ago. Chlor-alkali margins have remained strong, although weak vinyl industry demand is adversely affecting sales volumes. In the first-quarter of 2007, the OxyVinyls joint venture reported a $1.3 million loss. PolyOne sold its interest in this joint venture on July 6, 2007.
Additional considerations:
— The Company expects first quarter Corporate and eliminations to be
between $12 million and $14 million, including a $1.6 million one-time
purchase accounting charge related to the GLS acquisition.
— The Company anticipates net financing expenses to be approximately
$9.2 million in the first quarter of 2008, down $5.5 million from the
$14.7 million recorded in the first quarter of 2007. The lower expense
is due to the redemption of $241.4 million of the 2010 notes, partially
offset by debt incurred in connection with the acquisition of GLS.