Plastics and aluminum extruder Tredegar Corp. is closing a technical center and is reducing its activity in the semiconductor films market.
In an earnings release, officials with Tredegar in Richmond, Va., said the firm would close a technical center there that had served its PE Films unit. Tredegar also will reduce "its efforts to develop and sell films supporting the semiconductor market," they added.
Future R&D activities for the PE Films unit will be done at a similar facility in Pottsville, Pa. Officials said that the unit "continues to have new business opportunities, primarily relating to surface protection films that protect components of flat panel and flexible displays."
The Richmond technical center will close by the end of the year. Tredegar expects cash costs of $1.8 million and annual cash savings of $3.4 million in relation to the closing.
The second quarter of 2023 was a challenging one for Tredegar, with sales down 34 percent to $178.2 million, as the firm posted a loss of $18.9 million. It had made a profit of $14.9 million in the same quarter in 2022.
Tredegar's plastics units — PE Films and Flexible Packaging Films — made up about 28 percent of the firm's sales for the quarter, with the remainder coming from its Aluminum Extrusions unit. Second-quarter sales in PE Films were down 49 percent to $15.9 million, with EBITDA plunging almost 90 percent to $814,000.
Sales at Tredegar's Flexible Packaging Films unit dropped 20 percent to $33.2 million for the quarter, as EBITDA plummeted more than 95 percent to $249,000. The firm's PE Films unit makes polyethylene and polypropylene films, while its Flexible Packaging Films unit makes polyester films and similar products.
In the release, President and CEO John Steitz said that in the second quarter, each of Tredegar's operating units "suffered from depressed conditions in their markets, which we believe can mostly be traced to the residual impact of the pandemic."
He added that the timing of a recovery "remains uncertain" and that "significant spending controls are in place."
"What we need most is a recovery in sales, profits and operating cash flow across all business segments, which has been slow in occurring," Steitz said.
On Wall Street, Tredegar's per-share stock price was down almost 20 percent to $5.15 in late trading Aug. 9. That amount is 50 percent less than its price on Jan. 1.