PolyOne Corp. — North America's largest compounder and concentrates maker and one of its largest resin distributors — posted mixed results in 2016, with a solid gain in profit but a slight dip in sales.
Full-year sales at Avon Lake, Ohio-based PolyOne fell 1 percent to $3.34 billion, while profit jumped almost 12 percent to $165 million.
“2016 was a challenging year in many aspects, yet we found a way to expand our adjusted earnings per share for the seventh year in a row and, most importantly, invest for the future,” President and CEO Robert Patterson said in a Jan. 27 news release.
Among individual business units, Specialty Engineered Materials posted a sales gain of more than 4 percent for PolyOne in 2016, while sales in Distribution grew almost 4 percent. But sales in Color, Additives & Inks slipped almost 2 percent, with sales in Performance Products & Solutions — including PVC compounds — down almost 2 percent and sales in Designed Structures & Solutions — including sheet — tumbling more than 11 percent.
In operating profit for 2016, Performance Products & Solutions grew almost 30 percent, with Specialty Engineered Materials up almost 3 percent. Operating profit for Color, Additives & Inks slipped almost 6 percent, while Distribution essentially was flat in that area. Designed Structures & Solutions posted an operating loss of almost $4 million in 2016 after making almost $14 million the previous year.
Based on 2016 sales before eliminations, Distribution was the largest of PolyOne's five business units, generating almost 31 percent of the firm's sales total. Color, Additives & Inks held the number two sales spot with a share of almost 23 percent.
PolyOne remained active in M&A during 2016, acquiring thermoplastic elastomer-related assets for $72 million from Kraton Performance Polymers Inc. PolyOne also in 2016 paid $85.5 million to acquire two composites businesses from Gordon Holdings Inc. Gordon Composites makes high-strength profiles and laminates for sports equipment, office furniture and other markets. Polystrand is a maker of reinforced plastic composites.
Market analyst Kevin Hocevar, who covers PolyOne for Northcoast Research of Cleveland, said that PolyOne had a good fourth quarter, but he maintained a neutral rating on the firm.
“Investors have been waiting anxiously for PolyOne to deliver top line growth, and this finally came in the fourth quarter of 2016,” Hocevar said in a note to investors. “Despite our rating, this is a well-run company that should continue to drive higher earnings over the next few years as the company approaches its platinum vision.”
On Wall Street, PolyOne's per-share stock price began 2016 around $32 and peaked above $38 in July before returning to $32 by the end of the year. It had improved to $33.60 in early trading Jan. 30.
