Barnes Group Inc. executives are citing "lingering softness in automotive-related end markets" for a softening in sales for its Molding Solutions Group, which includes Synventive and Thermoplay hot runners and Männer and Foboha molds.
The Molding Solutions Group accounts for about half of the Barnes Industrial business segment and a third of Barnes Group in total. Barnes also has an aerospace segment.
Barnes, which is traded on the New York Stock Exchange, released its second quarter results July 26 as company leaders lowered their full-year 2019 guidance somewhat for the industrial segment, and for Molding Solutions.
"Many of our end markets remain soft, with lingering trade uncertainties," President and CEO Patrick Dempsey in a conference call.
Bristol, Conn.-based Barnes has built Molding Solutions Group around hot runners, molds and controllers. Last year, Barnes bought Gimatic srl, an Italian maker of end-of-arm tooling and sensors, as officials announced that the company also wants to build an automation group.
"At Molding Solutions, sales declined 16 percent over Q2 [of] 2018, with organic sales down 12 percent," Dempsey said. He said that "demand for automotive hot runners was particularly soft," citing lower global production levels for light vehicles, especially in Europe and China. Automotive model changes also remain slow, although he said the company is seeing program launches starting to happen in North America.
The industrial segment generated second quarter sales of $233.4 million, down 6 percent from the second quarter a year ago. Organic sales decreased about 11 percent, mainly from automotive softness. Operating profit for the overall industrial segment fell 28 percent from the prior year.
Light vehicles is a big market for Barnes' industrial segment.
"We saw the most pressure in Europe and Asia, while North America is where we saw the most resiliency," Dempsey said.
Dempsey said some customers are putting off investments because of lingering trade wars that are causing "global uncertainty," and what Dempsey called "evolving environmental regulations," especially European regulations over single-use plastics and biodegradable plastics.
Comparisons for 2019 results also are difficult when looking at a record 2018 for Molding Solutions, he said. But Dempsey said automotive hot runner sales are improving on a sequential basis — from the first quarter to the second quarter. That has continued in July and executives think the sequential growth will continue in the second half of 2019, he told financial analysts.
Dempsey said the company's mold business has seen sequential sales and orders up by single digits.
"The mold business is one of the most solid aspects of that outlook [for second-half recovery] in that we have the backlog already booked and already in the manufacturing cycle for both Q3 and Q4," Dempsey said, adding: "What we've seen in our molds business is dramatic swings quarter to quarter," largely in part because molds take so long to build before they are shipped out.
Even so, Barnes has reduced the 2019 outlook for Molding Solutions to minus high-single digits for total sales, and minus mid-single digits in organic sales. The overall industrial segment should remain flat through the year, or minus low-single digits measured in organic terms.
Barnes' aerospace business, focused on aircraft components, remains solid.
"Helping to offset those [industrial segment] headwinds has been sustained strong performance in aerospace, where we delivered another record level of quarterly revenue and operating profit," he said.
Companywide sales were $372 million in the second quarter, down 1 percent from the year-ago quarter. Organic sales declined 4 percent. Net income was $37.6 million, down about 24 percent from the second quarter of 2018.