Sector News

A. Schulman’s acquisition of Citadel Plastics masks revenue weakness

June 30, 2016
Energy & Chemical Value Chain

Plastics manufacturer A. Schulman Inc. on Tuesday reported a 16% revenue increase in the May quarter, bolstered by its Citadel acquisition last year.

Stripping Citadel sales, however, revenue would have declined about 4% from the year-ago period on weakness across segments.

Shares, down 31% this year, fell 1.3% to $20.90 in after-hours trading.

Ohio-based Schulman has been investigating possible misrepresentation of product quality at some plants it bought as part of its Citadel acquisition last year. Schulman has filed a complaint against the sellers and former executives of Citadel and its subsidiary Lucent to recoup its losses.

On Tuesday, Schulman said it has spent more than $10 million so far and estimated losses would top the $31 million that had been set aside to resolve such disputes as part of the acquisition.

The company now projects Citadel to contribute to earnings next year.

Over all, Schulman reported third-quarter profit, before convertible special dividends, of $17.4 million, or 53 cents a share, compared with a loss of $9.3 million, or 34 cents, a year earlier, when results were weighed by the Citadel acquisition. Excluding restructuring-related costs and other items, profit was 79 cents a share, up from 72 cents a share a year earlier.

Revenue rose 16% to $650.4 million, as Citadel’s acquisition added about $112.4 million, Schulman said.

Analysts had projected adjusted profit of 78 cents a share on $648.8 million in revenue, according to Thomson Reuters.

Historically, the third quarter is Schulman’s strongest.

Gross profit margin improved to 16.8% from 16.2% a year earlier.

Though based in the U.S., Schulman does most of its business abroad and has been hit hard by falling demand in Europe.

In the latest period, currency conversions lowered revenue by about $6.2 million, Schulman said, as it recorded lower revenue across segments except for the U.S. and Canada, where sales rose 34% again boosted by the Citadel acquisition. Without Citadel, Schulman said, sales would have declined 8.5%.

Schulman, which Tuesday affirmed its profit projection for the year, ended the quarter with about $47 million in cash and $986 million in debt.

By Maria Armental

Source: Wall Street Journal

comments closed

Related News

February 17, 2024

INEOS Inovyn launches Ultra Low Carbon Chlor-Alkali range

Energy & Chemical Value Chain

INEOS Inovyn announces a new Ultra Low Carbon range (ULC) of Chlor-Alkali products that reduce the carbon footprint of caustic soda, caustic potash and chlorine by up to 70% compared to industry averages. The new range uses renewable energy sources to power INEOS Inovyn manufacturing sites.

February 17, 2024

Solvay completes coal phase-out at Wyoming soda ash plant

Energy & Chemical Value Chain

Solvay operates seven soda ash plants worldwide. Beyond Green River, coal is being phased out at two of the company’s plants in France and Germany. By the end of 2024, the Rheinberg, Germany site will become the first soda ash plant in the world to be powered primarily with renewable energy.

February 17, 2024

Chemours names new board member

Energy & Chemical Value Chain

The Chemours Company has named Pamela Fletcher to its board of directors, effective March 1. Fletcher, formerly the chief sustainability officer at Delta Air Lines Inc., takes the seat of Sandra Phillips Rogers, who has opted not to stand for reelection to the company’s board.

How can we help you?

We're easy to reach