Changes are under way at PolyOne Corp. - and that's just the way its chief executive officer likes it.
``To say this company has changed in the last year would be something of an understatement,'' Steve Newlin said at the firm's annual meeting May 10 in Cleveland. ``It's become a substantially different entity.''
Newlin assumed the top spot at Avon Lake, Ohio-based PolyOne - which ranks as North America's largest compounder - in February 2006. Since then, he's worked to refocus the company on more specialized markets.
In the short-term, the strategy appears to be paying off. PolyOne's 2006 profit more than doubled over the year before, reaching $123 million. Sales rose 7 percent during 2006 to more than $2.6 billion. That represents the highest full-year sales mark - excluding sold-off engineered films and elastomers units - since the firm was created from the merger of Geon Co. and M.A. Hanna Co. in 2000.
At the meeting, Newlin cited other examples of the firm's financial progress, including a sales gain of almost 30 percent in Asia and elimination of $66 million in debt.
Also in 2006, PolyOne improved its on-time delivery performance by 7 percent and improved lead times in its PVC compounds business by 40 percent. A newly installed Six Sigma quality management plan also is expected to yield savings of $2 million in 2007.
``We're bringing extensive fundamental change to every aspect of business,'' Newlin said. ``If our materials process faster or generate less scrap, that's of value to our customers. Customers want meaningful help to improve their operations and outcomes.
``We used to think in terms of volume, general-purpose markets. Now, we're targeting markets where we can use our formulations expertise for our customers. We're looking at advancements in the medical market, in biodegradable and bio-derived materials and in electronics.''
2006 also saw PolyOne strengthen its management ranks by adding industry veterans Craig Nikrant, John Van Hulle, Cecil Chappelow, Randy Fortin and Michael Kahler. Nikrant is general manager of the firm's North American Engineered Materials unit, while Van Hulle holds the same position in North American Color and Additives.
Chappelow is chief innovation officer, Fortin is vice president of marketing and Kahler serves as senior vice president of commercial development.
PolyOne got off to a roller-coaster start in the first quarter of 2007, with first-quarter profit plunging more than 80 percent to $7.4 million and first-quarter sales dipping about 2 percent to just under $658 million. Investors, however, were unfazed, driving the compounder's per-share stock price up almost 10 percent over a two-day period.
This inverse reaction by Wall Street occurred from May 1 to May 3, when PolyOne's per-share stock price rose 8.4 percent. The first-quarter report was issued May 2. After being just above $6 per-share in late March, the stock stood at about $7.30 in late trading May 10.
PolyOne's Dennis Cocco said investors focused on the firm's internal improvements - including higher gross profit margins - instead of on the year-vs.-year profit drop.
``We want the company to be valued on what we do,'' said Cocco, the firm's vice president of investor relations and communications.
Most of the first-quarter profit loss was chalked up to a big decline in PolyOne's resin and intermediates unit, which includes its ownership stakes in PVC maker Oxy Vinyls LP of Dallas and feedstock producer Sunbelt Chlor-Alkali in McIntosh, Ala. PolyOne does not manage either of those businesses.