The auto materials business has softened, but Hillenbrand Inc. President and CEO Joe Raver says Coperion extruders are doing well in other areas, including engineering resins and large projects to make polyolefins.
Automotive is a big driver of sales at Coperion, and global vehicle production is slowing, Raver said during an Aug. 1 conference call on quarterly results.
"On the other hand, end markets of polycarbonate, ABS and PVC are healthy and growing," Raver said. Coperion also is experiencing growth in large extrusion systems to manufacture polyolefins, especially in North America and Asia, he said, adding: "We continue to see a very solid pipeline in those projects."
Raver said the company is seeing a growing presence in food and pharmaceutical applications. Equipment for recycling also is solid, he said.
Raver's comments came as Hillenbrand reported companywide third quarter sales of $446.6 million, flat from the third quarter of 2018. Sales increased 3 percent when excluding the impact of foreign currency exchange. Net profit for the quarter was $30.4 million, down 15 percent from $35.9 million in the year-earlier period.
Order backlog of $940 million increased 20 percent from the year-ago period, primarily from demand for the large plastics production systems.
"Plastics is a bright spot this year in the quarter," he said in the call to financial analysts.
The Batesville, Ind.-based Hillenbrand is making a giant move into even more plastics machinery with the July 12 announcement it is buying Milacron Holdings Corp. in a cash and stock deal valued at about $2 billion. The deal is expected to close in the first quarter of 2020. Both companies are traded in the New York Stock Exchange.
Raver said Hillenbrand leaders "believe it's a pivotal next step to achieve our vision to become a world-class global diversified industrial company."
Hillenbrand also manufacturers Batesville burial caskets. The company went public in 2008 and has been diversifying into industrial machinery, building a Process Equipment Group including plastics-related equipment of Coperion extruders; K-Tron material handling, feeding and conveying equipment; and Rotex and BM&M, makers of screening and material separation equipment for plastics and other industries. The Process Equipment Group also includes makers of pumping systems.
Buying Milacron dwarfs those past acquisitions. Raver told analysts Hillenbrand expects cost savings of $50 million in the first three years after the Milacron acquisition closes. Hillenbrand is not planning any deals in the near term after that and will focus on paying down debt, he said.
In the third quarter, strength from the large plastics projects was partially offset by reduced demand in other industrial end markets, including screening and separation for sand used for hydraulic fracturing, or fracking, of oil and natural gas. Raver said business has been reduced for fracking-related sand — an energy sector that has sharp ups and downs — so the $315 million sales for Process Equipment Group was flat from the third quarter a year ago.
Batesville burial products generated $131 million in third quarter sales, an increase of 2 percent from the same quarter last year.