Cost cutting continues for Hillenbrand plastics units

Hillenbrand Inc. will continue cost-cutting measures in its plastics machinery businesses, the company reported in its second quarter earnings call on May 1.

"We continue to operate in a challenging demand environment as global macroeconomic uncertainty continues to impact customer order decisions across many parts of our business," President and CEO Kim Ryan said.

Referring to its Molding Technology Solutions (MTS) segment, which includes the Milacron, Mold-Masters and DME brands, Ryan said: "We remain cautiously optimistic that we've hit the trough, but we do not expect the material recovery in fiscal 2024."

The U.S. and China are key markets for the company's hot runners, and Ryan said consumer goods markets in those regions are still suffering.

In injection molding machinery, however, "we've seen some nice pickup in some of the markets that are relevant for us," including automotive, and "the outlook continues to be, I would say, optimistic in those areas as they begin to see some uptick."

Orders for injection molding machines — a segment that has been hit hard by a global manufacturing slump — were the highest in seven quarters, Ryan said.

"We saw bright spots on demand for injection molding equipment, particularly for automotive and packaging applications, but weakness and consumer goods and electronics," said Bob VanHimbergen, senior vice president and chief financial officer.

Referencing its Advanced Process Solutions segment, which includes the Coperion and Herbold brands, Ryan said the company is seeing strong sales to aftermarket and polyolefin customers, including big resin production projects.

But that has been offset by lower-than-expected orders for midsize capital projects, including compounding projects.

"Order pipelines remain robust and utilization at our test facilities remains high. However, final customer decisions continue to be slower than expected, which is negatively impacting the segment's top line for the year," Ryan said.

"In response, we began implementing cost actions during the quarter, including targeted restructuring and strict limitations on hiring, travel and other discretionary costs," Ryan said.

In the first quarter, Hillenbrand had announced restructuring plans aimed at cutting costs and improving efficiency within the MTS segment, which officials said would cost about $20 million but save the company $15 million annually.

Those cuts would have resulted in a 5 percent decrease in the MTS workforce.

In the May 1 earnings call, Ryan said Hillenbrand "took additional actions during the quarter, including the consolidation of an additional facility in March," which brought the total cost of the restructuring to $25 million, but will save the company $20 million annually starting next year, and $8 million in 2024.

Officials did not go into details about the restructuring in the earnings call, but Plastics News reported in March that Hillenbrand's DME unit is in the process of closing facilities in Windsor, Ontario, and Greenville, Mich.

The company reported quarterly sales of $785 million, which was up 14 percent compared with the same quarter a year ago. But the increase was the result of a non-plastics related acquisition.

Not counting the acquisition, Hillenbrand's sales were down 5 percent. Net profit for the quarter of $6 million was down from $23.3 million in the same period of 2023.

Batesville, Ind.-based Hillenbrand warned investors that it is lowering its expectations for the fiscal year. For APS, the company is predicting sales of between $2.35 billion and $2.4 billion, down from a previous estimate of $2.4 billion to $2.5 billion.

For the MTS unit, the company is predicting sales of between $880 million to $900 million, down from a previous estimate of $880 million to $940 million.

The earnings call came less than a week before NPE2024, where Hillenbrand and its operating companies will exhibit Booth W1601.