Milacron Inc. lost money again in 2004, but officials said they are encouraged by a pickup in Milacron's North American injection press sales. Company officials said they expect Milacron to become profitable again later this year.
North America is a key market for the maker of injection presses, extruders and blow molding machines, since it accounts for half of Milacron's total plastics equipment sales. The Cincinnati-based company said fourth-quarter sales for plastics technologies increased nearly 12 percent, to $96.7 million. The operating profit margin was a strong 9.4 percent.
The North American numbers, plus currency conversion effects from the weak dollar, helped propel Milacron to companywide fourth-quarter sales of $213.1 million. It marked the first time in nearly four years that Milacron has generated more than $200 million in sales for a quarter, according to Ronald Brown, chairman, president and chief executive officer.
Looking at results for the whole company, Milacron lost $1.15 million in the fourth quarter. That's much less than the $24.2 million in red ink for the final period of 2003. And Brown, in a Feb. 14 conference call, told analysts the company probably will report a small loss in the first quarter of 2005.
But Brown was fairly upbeat, thanks to the recovering U.S. manufacturing economy and Milacron's moves to win sales in growing parts of the world.
``For the rest of 2005, with continued sales growth initiatives and cost-reduction measures, we believe we will be able to return to profitability in the latter half of the year,'' Brown said. Continued growth in North America, Eastern Europe and Asia will more than offset softness in Western Europe this year, he said.
Milacron lost $450 million from 2001 through 2003. In 2004, the company lost another $51.1 million - but again, that was much lower than the $190.9 million loss for 2003. Milacron reported 2004 sales of $774.2 million, up 4.7 percent from 2003 sales of $739.7 million. Of that total, $665.2 million came from plastics technologies.
For the full year, Milacron's North American plastics machinery sales rose 4.1 percent, to $334.4 million, up from $321.2 million in 2003.
Brown pointed to solid economic indicators. He said U.S. capacity utilization for plastics processors has held steady at 83.4 percent for several months - right near the magic number of 84 percent that Milacron leaders said will spark machinery buying. Brown said strong markets include automotive, construction, medical, consumer goods and appliances.
``Orders from the packaging industry were soft for 2004, down almost 20 percent from 2003,'' Brown said, adding that he expects a modest pickup this year from packaging.
Milacron's machinery sales from Europe were $167 million, up 10.6 percent from $151 million in 2003, but demand softened in November and December. Europe reported a profit of $1.8 million, after losing slightly less than that the year before.
Mold technologies, which is Milacron's D-M-E mold component business, saw sales decline 1 percent to $167.1 million.
Brown said the European machinery business turned a small profit in 2004, but it was not enough to offset losses by D-M-E in Europe. Milacron did a major restructuring of the European D-M-E. He said Milacron is not expecting any major growth from Europe in 2005, as the strong euro hurts exports from its customers there.
Milacron passed a big hurdle in 2004 by successfully refinancing major bond debts and bringing in new investors.
In the Feb. 14 fourth-quarter report, Milacron also announced it has reached an agreement with its bank group to relax terms of its revolving credit line. Those changes include a reduction in the minimum levels of earnings before interest, taxes, depreciation and amortization required in 2005.