Nordson Corp. executives are predicting sales growth in the low single digits this year — mainly because of a slowdown in mobile phones, an important market for its precision fluid dispensing systems — but President and CEO Michael Hilton said other sectors are holding up.
Hilton, in a second-quarter conference call, said long lead times in coatings and the polymer business signal an improvement in business for the fourth quarter. Nordson's plastics-related businesses include Xaloy screws and barrels, BKG pelletizers and EDI flat dies, which are organized under the Adhesive Dispensing Business.
Companywide, both sales and profit for the quarter were flat compared to the year-ago second quarter.
Nordson reported sales of $551 million in the second quarter of fiscal 2019, ended April 30. That is down less than 1 percent from the year-earlier second quarter. The change in second quarter sales includes a 3 percent increase in organic sales and a decrease in unfavorable currency translations.
Second quarter net profit was $92 million, unchanged from the year-ago period.
Adhesive Dispensing Systems sales declined 1 percent from the second quarter of 2019, including organic growth of 4 percent and a 5 percent decline from currency effects.
"Growth was solid across most product lines," Gregory Thaxton, executive vice president and chief financial officer, said.
Hilton said a lack of investment in new models of mobile phones, lower consumer demand and continuing trade tensions between the United States and China are impacting business for Nordson equipment for that sector. He said Nordson supplies international cell phone customers, including all the major Chinese players.
"Our forecast is assuming a pretty modest year from a mobile business in general," Hilton told analysts. But he said Nordson's other businesses are doing well. "The diversity of our business is going to cause us to grow and increase margins this year," he said.
Hilton also said consolidation and investment moves should begin to yield efficiency improvements as Nordson goes into 2020.
In Nordson's plastics-related businesses, the company is centralizing all Xaloy screw and barrel production in a single manufacturing plant in Austintown, Ohio, near Youngstown; a new world headquarters for EDI flat dies and Premier coating dies in Chippewa Falls, Wis.; and a global hub for BKG pelletizers, screen changers and melt filters in Munster, Germany.
Nordson, based in Westlake, Ohio, is traded on the Nasdaq.