Nordson Corp. executives expect flat to modest sales growth this year, citing macroeconomic trends, mostly in the electronics end market.
The Westlake, Ohio-based company said lingering uncertainties related to trade disputes are having a significant impact, and customers are delaying capital projects as a result.
"The ongoing uncertainty related to international trade disputes continues to influence customer investment in new technology and capital," Michael Hilton, former president and CEO of Nordson, said Aug. 21 in a third quarter conference call.
Hilton announced his retirement in February. He is succeeded by Sundaram Nagarajan, who stepped into the top leadership role Aug. 1.
"This challenging macroeconomic environment lasted longer than most expected and, as a result, capital projects have been delayed. We've had a weaker third quarter than we originally anticipated," Hilton said.
Nordson reported sales of $560 million in the third quarter of fiscal 2019, ending July 31. This marks a decrease of 4 percent compared with the prior year's third quarter sales of $581 million.
Operating profit for the third quarter was $130 million and net profit was $94 million compared with $138 million and $95 million, respectively, in the third quarter a year ago.
The 2019 third quarter results also include approximately $1.4 million of one-time restructuring charges and the step-up value of acquired inventory. Growth in the quarter related to the first-year effect of the 2018 acquisition of Clada Medical Devices and, more recently, the July 1 acquisition of Optical Control GmbH were not significant, the company said.
Nordson makes dispensing equipment for consumer and industrial adhesives, sealants and coatings. It also has a plastics segment, called Adhesive Dispensing Systems, which includes Xaloy screws and barrels, EDI flat dies, BKG pelletizers and melt delivery systems.
Hilton said softness in product lines for the electronics end market as well as those within the Industrial Coatings segment offset "solid organic growth" in the Adhesive Dispensing business and nonelectronic product lines in the Advanced Technology segment.
Adhesive Dispensing Systems sales increased 2 percent from the third quarter of 2019. Advanced Technology Systems decreased 5 percent.
In Industrial Coatings, some customers moved deliveries into the fourth quarter, which impacted sales volume, Hilton said. Sales for the segment, which includes powder coating, sealant adhesive systems and liquid painting, among other products, slumped 18 percent compared with the prior year's third quarter.
"For the full year, we now expect flat to modest organic sales growth," Hilton said of the company's 2019 outlook.