Royal Group Technologies Ltd. is implementing a series of temporary plant shutdowns after a disappointing third quarter, the highest level of shutdowns in its 30-year history.
Officials from the Woodbridge, Ontario, firm would not comment on which plants will be affected as they seek to reduce inventory levels, but they emphasized that none is permanent. The firm operates 39 extrusion plants in North America.
``We can't give specifics because the plans have not been finalized,'' said Mark Badger, vice president of corporate communications, in an Aug. 1 telephone interview. ``We're not anticipating any permanent layoffs of any consequence.''
Reporting its third-quarter results, officials called the financials ``unacceptable.'' Its sales were C$525 million (US$390 million) for the period ended June 30, compared with C$579 million (US$381 million) for the same period in 2002. Profit was C$28 million (US$20 million), compared with C$57 million (US$37 million) for 2002's third quarter. Officials said the change in sales primarily can be attributed to U.S. dollar- denominated sales being recorded at a lesser exchange rate, and reductions in window coverings and pipe sales.
``High material costs and low capacity utilization throughout the group have proved difficult challenges in a sluggish economic environment, particularly in the United States,'' President Doug Dunsmuir told analysts. ``Strategies continue to be implemented to improve performance.''
Despite the trouble, one analyst has issued a buy rating on Royal's publicly traded shares, which on Aug. 1 were at C$10.37 (US$7.38) on the Toronto Stock Exchange.
``In my view, the results were right on track with expectations,'' said Jay McKinnell, an industrial products analyst with Raymond James Ltd. in Toronto. ``The company will recover gradually and be in a position to show good numbers during its peak season next year. The stock market's focus is shifting from the debacles and scandals to fundamentals, and I think that's very positive.''
During the conference call, officials said they are eyeing several sites for production expansion in fiscal 2004, including a custom profile plant near Pittsburgh and a profile extrusion site in Laval, Quebec, where its Thermoplast Inc. subsidiary is based. The expansion near Pittsburgh will include buying or building another facility.