A. Schulman Inc. is significantly lowering its adjusted net income range guidance for the year because of "margin compression" in Europe and some "weakened operating results" compared to earlier forecasts in other regions, according to a news release.
On Oct. 26, 2016, the Fairlawn, Ohio-based resin distributor and compounder had provided initial guidance of $2.08 to $2.18 per diluted share, assuming an exchange rate of 1 euro trading at $1.13, and assuming that other major currencies remained relatively stable, the release stated.
The revised guidance range released on July 20 was lowered to $1.60 to $1.70 per diluted share for 2017. Adjusted earnings before interest, taxes, depreciation and amortization was estimated to be $200 to $204 million.
A. Schulman stock closed the day July 20 at $25.90 per share, down nearly 17 percent from its close on July 19.
"While our volumes in Europe remain on track with our expectations, we are incurring significant margin pressure in the region due to the magnitude and timing of raw material cost increases," Joseph Gingo, chairman, president and CEO, said in the release. "This compression compounds the macroeconomic headwinds and previously disclosed operational challenges thus making our full-year guidance unattainable, despite the continued progress we are making in this reset year."
A. Schulman has been working to improve its financial standing in recent years, after problems arising from the purchase of Citadel Plastics added to an already challenging global market.