PolyOne Corp. in 2018 saw its sales grow even as profit from continuing operations declined.
Avon Lake, Ohio-based PolyOne — a leading compounder, concentrates maker and resin distributor — posted sales of $3.53 billion in 2018, up more than 9 percent vs. the previous year. But profit from continuing operations declined almost 7 percent to a little more than $161 million.
In a Jan. 29 news release, Chairman, President and CEO Robert Patterson pointed out that 2018 was the ninth consecutive year that PolyOne delivered adjusted earnings-per-share growth to its shareholders.
"This is a testament to the execution of our four-pillar strategy, our world-class service and the dedication of our global associates," he added. He singled out the firm's Color, Additives & Inks unit, which posted double-digit growth in both sales and operating profit during 2018.
"Overall, I am incredibly pleased with our performance this year, when considering that we incurred significantly higher raw material and logistics costs," Patterson added. "We also overcame a more recent slowdown in demand in certain end markets and geographies which negatively impacted the second half of the year."
Color, Additives & Inks rang up sales growth of 17 percent for 2018. Sales in Distribution were up almost 10 percent for the year, with Specialty Engineered Materials sales up more than 3 percent and Performance Products & Solutions sales — including PVC compounds — up more than 2 percent.
Based on sales before eliminations, Distribution was the largest of PolyOne's four units in 2018, generating more than 34 percent of total sales. Color, Additives & Inks brought in just over 28 percent, PP&S generated almost 20 percent and SEM was at 17.5 percent of sales.
Color, Additives & Inks was the only PolyOne unit to show operating profit growth in 2018. That unit's operating profit grew 14.5 percent, while SEM and PP&S each declined by more than 4 percent and Distribution declined 1.5 percent in that category.
During 2018, PolyOne made two acquisitions, buying composites maker PlastiComp Inc. of Winona, Minn., and European specialty colorants and additives maker IQAP Masterbatch Group SL. The firm also kicked off 2019 with another acquisition, buying fibers and composites maker Fiber-Line of Hatfield, Pa., for $120 million.
Also during 2018, PolyOne reduced manufacturing employee injuries by 19 percent. Overall, 2018 was the safest year in the company's history, officials said.
PolyOne in 2018 was certified as a Responsible Care organization for outstanding environmental, health and safety performance by the American Chemistry Council. And for the first time, PolyOne was certified as a Great Place to Work in the U.S. by the Great Place to Work Institute.
Looking ahead, Patterson said in the release that many companies "are citing softening conditions in certain end markets and geographies."
"We certainly saw this at the end of 2018 and expect these conditions to continue into the beginning of this year," he added. "Fortunately, with the investments we have made, the breadth of our portfolio of technologies, and the organization we have in place, we are better positioned to navigate these near-term dynamics than ever before."
On Wall Street, PolyOne's per-share stock price had a rough 2018, starting the year near $43.50 but declining to $32.20 by the end of the year for a decline of just over 30 percent.
Fourth-quarter and full-year results had sent PolyOne's per-share stock price up almost 5 percent to $33.70 in early trading Jan. 29.
Research firm Northcoast Research of Cleveland lowered its 2019 EPS target for PolyOne, but remained optimistic about the company overall.
“We believe management's longer-term target of double digit EPS growth annually may be difficult to achieve in 2019 given the macro backdrop, however we do believe [high single digit] growth is attainable,” analyst Kevin Hocevar wrote in a research note.
“Though the recent [per-share price] pullback makes PolyOne more appealing, we'd like to see how some of the near-term issues progress,” he added.
