Davis-Standard Corp. saw higher sales but lower profit in 2004, as the plastics machinery business remains on the ``fix-it-or-ship-it'' list of its chemical-company parent, Crompton Corp.
Davis-Standard did turn a profit in 2004, its second straight year in the black. The company in Pawcatuck, Conn., lost money in 2001 and 2002.
Crompton reported its fourth-quarter and year-end results Feb. 3. Its Davis-Standard unit makes extruders, film equipment and blow molding machines.
Davis-Standard reported 2004 sales of $180 million, up from $166.5 million in 2003. The equipment maker enjoyed strong fourth-quarter sales of $54.7 million, a 17.3 percent increase from the year-earlier period.
Crompton attributed the good fourth quarter to higher unit volume of 13 percent, a favorable foreign currency translation of 3 percent, and a 1 percent improvement in pricing for Davis-Standard machinery.
Davis-Standard's operating profit plunged 35 percent to $3.36 million for 2004. The firm reported a backlog of orders at the end of December of $86 million, up $24 million from the end of 2003.
In mid-2004, Robert Wood, Crompton's chairman, president and chief executive officer, dropped a bombshell in a quarterly conference call by telling financial analysts that Davis-Standard ``doesn't fit long-term'' with Crompton. This time around, in the Feb. 3 call, he made no such pronouncements. In fact, he barely mentioned the machinery unit at all, spending most of his time explaining early success on his moves to overhaul Crompton's big additives and special chemicals business.
Contacted after the conference call, Crompton spokeswoman Mary Ann Dunnell said Davis-Standard remains on the company's list of units to be fixed or divested.
Companywide, Middlebury, Conn.-based Crompton lost $34.6 million on 2004 sales of $2.5 billion. One analyst pointed to the improved order backlog for Davis-Standard and asked Wood whether he thinks customers are embarking on a sustained move to boost capacity.
``Well, they're not yet at a point where they have to add capacity, but the order patterns do look much stronger, all around the globe,'' Wood said. ``It's principally driven by Asia and Europe, but the U.S. finally has begun to pick up as well.''