CINCINNATI — Milacron Inc. is hoping for a stronger second half of 1999, after a slow start this year for its plastics machinery and cutting-tool businesses, officials said at the annual shareholders meeting April 27.
Meanwhile, its Plastics Technologies Group has enjoyed a sales boost from Uniloy blow molding machines, which Milacron bought in the fourth quarter last year from Johnson Controls Inc. An executive also said Milacron may make an acquisition to broaden its plastics equipment line. Milacron makes injection presses, blow molding machines, extruders, D-M-E mold components and structural foam molding machines.
Companywide, Milacron reported 1998 sales of $1.51 billion, a 5 percent gain over $1.44 billion in 1997.
Plastics Technologies' 1998 sales increased 8 percent, to $796.4 million, from $735.7 million. Operating profit jumped 35 percent, to $80.3 million, for a 10 percent profit margin. Milacron attributed higher profit numbers to strong 1998 performances by its injection press plants in Europe and North America, and a strong U.S. extrusion market.
The Plastics Technologies Group in Batavia, Ohio, remains on target to hit $1 billion in sales, said Vice President Harold Faig.
But Milacron officials are counting on at least a modest second-half pickup in business. Injection press sales have slowed. Interviewed after the meeting, Faig confirmed that Plastics Technologies furloughed some workers in the past month, as a way to work down excess inventory. Under the furloughs, both white-collar and blue-collar employees were asked to take one week off, using up a vacation week, he said.
Faig characterized the move as a one-time action to meet a short-term business problem.
``There's no sense building inventory up until you balance our requirements for the rest of the year,'' he said after the meeting.
Faig also said Plastics Technologies always looks to buy companies, but only ones that will expand the product line. Milacron does not want acquisitions simply to increase market share or sales, he said.
Milacron also released first-quarter 1999 figures. Plastics machinery sales rose 20 percent, to $217.2 million, from $180.3 million in the first quarter of 1998 — but all of that increase came from new sales from Uniloy. First-quarter operating profit climbed 24 percent, to $20.1 million, from $16.2 million.
``Some of the segments are soft,'' Faig said. ``Injection molding, for instance, has been relatively flat.'' But he said the extrusion business, Uniloy and D-M-E all are running at all-time highs.
In a speech to shareholders, Daniel Meyer, chairman, president and chief executive officer, said industrial production is likely to remain slow in the second quarter.
Last year, in a dramatic move, Milacron sold off its 114-year-old machine-tool business to focus on the two remaining divisions, Plastics Technologies and Cutting Process Technologies. The cutting process unit makes drills, grinding wheels, metalworking fluids and other products, and that unit reported flat first-quarter sales. Both plastics equipment and cutting products are higher-profit, less-cyclical businesses than machine tools, which generated a mere 1-3 percent profit.
``Our plastics businesses are largely driven by consumer spending, while our cutting process business tracks industrial production,'' Meyer said.
Both those areas offer consistent growth rates, he told shareholders.
Meyer also devoted plenty of time to discussing Milacron's lackluster performance on the New York Stock Exchange in the past year. Its stock has fallen from about $30 last May. While it moved up from $16 a share at the end of March to more than $20 just before the April 27 shareholders meeting — a 25 percent leap — that surge apparently resulted from a temporary movement of money into industrial stocks by investors nervous about high-priced Internet and computer stocks, according to analysts and company officials.
