Challenging financial results have led PolyOne Corp. to reduce spending and cut jobs.
The Avon Lake, Ohio-based company cut about 40 jobs in the first quarter, primarily in corporate and managerial positions. PolyOne also cut discretionary spending, including outside professional services and travel.
One of North America's largest compounders, concentrate makers and resin distributors, PolyOne had a tough first quarter for 2019, with sales flat and net profit down almost 20 percent.
“We believe the current market challenges are temporary, and we will see a recovery in the second half of the year,” Chairman, President and CEO Robert Patterson said in an April 17 news release.
“While we are encouraged and optimistic, we are not waiting for market improvement to unfold,” he added. “Accordingly, we have taken actions to reduce costs primarily through targeted workforce reductions and limiting discretionary spending.”
“We believe these actions are prudent in the short term, but also balanced, as we are not curtailing our ability to deliver for the long term,” Patterson said. “We are continuing to invest in key end markets and innovation, and as this quarter has demonstrated, our investments in composites and sustainable solutions are paying off.”
PolyOne posted sales of a nearly $900 million for the first three months of the year, roughly equal to results from the year-ago period. Company officials said in the release that acquisition-related sales growth of 3.5 percent was canceled out by a 1.5 percent organic sales decline and a decline of 2 percent from unfavorable exchange rates.
PolyOne's net profit for the three months, however, slipped almost 20 percent to $38.2 million. Operating profit also declined more than 13 percent to $68.3 million.
“Like many companies in our space, we experienced weaker demand in certain end markets and unfavorable foreign exchange during the first quarter,” Patterson said.
Patterson added that key drivers for PolyOne's first-quarter results included lower automotive sales in Europe and China which impacted the firm's Color, Additives & Inks and Specialty Engineered Materials (SEM) units, as well as a decline in construction related sales, which primarily impacted its Performance Products & Solutions (PPS) unit in North America.
“These headwinds were partially offset by favorable product mix and margin expansion in distribution, as well as new business gains in composites and sustainable solutions,” he said. “In fact, we had our best quarter ever for composites since we began investing in this space.”
First-quarter SEM sales jumped almost 16 percent, with distribution sales — including third-party resins and compounds — up almost 1 percent. But PPS sales, including PVC compounds, were down 11.5 percent and color sales declined almost 3 percent.
In first-quarter operating income, PPS tumbled 33 percent, with color down 6 percent. But distribution operating income was up 7 percent and SEM was up almost 6 percent.
On Wall Street, first-quarter results sent PolyOne's per-share stock price closed at $28.86 on April 17, down from $30.30 at the start of the day, while 3.2 million shares changed hands on the day, up from volumes ranging from 350,000 to 1.9 million shares during the past month.
