Milacron sounds 'cautious' note for 2016

Milacron LLC generated sales of $1.18 billion in 2015, and two executives used the word “cautious” to describe 2016, saying that poor visibility clouds the outlook for the second half.

Milacron CEO Tom Goeke also said Milacron and the first customer of its Klear Can plastic food package will make an announcement shortly.

Milacron reported its 2015 sales declined by 2.6 percent from the year-before sales of $1.21 billion. But Milacron also provided numbers on a constant-currency basis — to exclude unfavorable effects of currency movements — and measured that way, sales increased 2.8 percent from the year before.

The strong dollar has hit financial-reporting numbers for many U.S. companies.

Milacron, based in Blue Ash, Ohio, began trading on the New York Stock Exchange June 25 after an initial public offering.

Milacron also lost $38.8 million in 2015, up from a loss of $14.9 million in 2014, according to its financial report. The company said adjusted net income in 2015 was $98.2 million, up 31.8 percent from an adjusted net of $74.5 million.

The largest U.S. manufacturer of plastics machinery released its fourth quarter and year-end numbers March 2.

“I think ‘cautious' is the word,” Goeke said in a conference call, answering a financial analyst's question. “There are a lot of projects in the pipeline, but until they close you don't have an order. So stay tuned.”

Bruce Chalmers, vice president of finance and chief financial officer, echoed that: “The difficulty that all of us have in the industry is just lack of visibility as to what the second half of the year looks like. So we're approaching the year cautiously, and really focused on making sure that we're taking costs out as quickly in the business.”

He said Milacron also is “staying attentive to growth opportunities” in different parts of the world and end markets.

“So it's cautiousness at this point, just due to lack of visibility, and the general economic environment that I think we're all looking at,” Chalmers said.

Because of that uncertainty, Milacron leaders expect organic sales growth this year of just 0 to 2 percent — well below their long-term goal of 5 percent.

But Goeke and Chalmers said Milacron is moving ahead in cost cutting, making $10 million in cost realignment moves in 2015. The goal is $35 million in cost reduction by the end of 2017. An example from last year: The maker of machinery, hot runners, mold components and screws and barrels moved to consolidate European manufacturing of Uniloy blow molding machines in the Czech Republic city of Policka — cutting assembly jobs in Italy. Milacron also relocated a warehouse in Belgium to Policka.

Money from the IPO was used to reduce debt.

Goeke said the company strengthened its equipment aftermarket business in 2015 by adding 25 service technicians and consolidating regional call centers. That will help what he called Milacron's “life-cycle sales approach.”

New products introduced over the last three years generated 15 percent of total sales, Goeke said. “We introduced 11 new products in 2015, a record year for Milacron,” he said.

Milacron's Klear Can technology is facing competition from Sonoco Products Co.'s TruVue in the battle to commercialize see-through plastic cans to replace the ubiquitous “tin can” on grocery shelves.

“We have probably seven (projects) in the pipeline,” Goeke said, adding that the company that's set to come out the quickest has agreed to do a press release.

Goeke also recapped Milacron's business throughout the world. Sales in India grew the fastest, at 7.7 percent. North America was up 4.8 percent. Europe gained by 3 percent. China and Asia declined by 5 percent.

He said North American orders picked up in the fourth quarter from the third quarter of 2015, and they continued good through January. China remains the same as last year, leading the decline in Asia, Goeke said, adding that he does not see any recovery in China this year.

“Europe seems pretty solid actually,” Goeke said. India continues to enjoy strong sales of equipment and hot runners.

Chalmers said the consumer products, automotive and custom molding markets were all strong for the full year of 2015.

Even though the crystal ball is a big cloudy right now, Chalmers said Milacron's diversity is a strength. “Our balanced geographic and end-market portfolio provided good stability in an otherwise turbulent economic environment,” he said.