Higher prices for oil-based raw materials negatively impacted Cinram International Inc.'s quarterly profit and prompted the media maker to reduce its 2004 earnings forecast Nov. 3.
Amid criticism of disappointed analysts, Scarborough, Ontario-based Cinram saw its shares on the Toronto Stock Exchange drop more than 23 percent Nov. 4, closing at C$18.15 (US$15).
Cinram reported profit of US$17.8 million on acquisition-enlarged sales of US$494.8 million for the quarter ended Sept. 30, vs. profit of US$13.8 million on sales of US$147.2 million for the 2003 period.
``The company expects to see sustained strength in oil prices in the fourth quarter, which will continue to impact raw material prices and in turn Cinram's profit margins for the year,'' the firm said.
In October 2003, Cinram acquired the optical media manufacturing, printing, packaging and physical distributions operations of Time Warner Inc.'s Warner Manufacturing Group for US$1.05 billion. Simultaneously, New York-based Time Warner contracted with Cinram to provide services under a six-year agreement.
Meantime, Cinram plans to boost DVD production capacity at its Olyphant, Pa., plant by 135 million units and create 60 jobs within three years, Dennis Yablonsky, Pennsylvania community and economic development secretary, said in a Nov. 4 release.
His state agency and the Greater Scranton Chamber of Commerce worked with Cinram in securing a $1.25 million Pennsylvania Industrial Development Authority loan, $500,000 through the machinery and equipment loan fund, a $100,000 opportunity grant, $180,000 in job-creation tax credits and $100,000 in customized job training.
On Nov. 2, Cinram said it signed a multiyear agreement with longtime customer Twentieth Century Fox Home Entertainment to manufacture and distribute DVDs and videocassettes in Europe. The deal extends an agreement to make and distribute the products in North America.