Wellman down in 3Q
By Staff -- Home Textiles Today, 10/27/2003
SHREWSBURY, NJ — With sales under pressure in an increasingly competitive environment for polyester fibers and products, and margins under pressure from rising raw material costs, Wellman Inc. recorded a third-quarter loss of $7.5 million, compared with a year-before profit of $4.5 million.
Slowing down, sales edged up by 1.9 percent, to $262.1 million from $257.3 million last year. Reflecting stronger sales during the first half of the year, nine-month sales advanced by a sturdy 8.9 percent, to $883.4 million from $765.3 million.
Squeezed by rising raw material costs, average gross margin narrowed by 350 basis points, or 3.5 percentage points, to 6.3 percent from 9.8 percent a year ago. Costs climbed higher as a percentage of sales, to 7.7 percent from 6.6 percent a year ago.
Tom Duff, chairman and ceo, said results "were primarily the result of increases in raw material costs and extremely competitive conditions in the NAFTA PET resins market," stemming from recent capacity increases and a third-quarter drop in demand due to poor weather in the eastern United States.
| Qtr. 9/30 (x000) | 2003 | 2002 | % change |
| Sales | $262,100 | $257,300 | 1.9 |
| Oper. income (EBIT) | (3,800) | 8,200 | — |
| Net income | (7,500)a | 4,500a | — |
| Per share (diluted) | (0.24) | 0.14 | — |
| Average gross margin | 6.3% | 9.8% | — |
| SG&A expenses | 7.7% | 6.6% | — |
| Nine months | |||
| Sales | 833,400 | 765,300 | 8.9 |
| Oper. income (EBIT) | 10,800 | 38,300 | -71.8 |
| Net income | (1,500)b | (197,700)b | — |
| Per share (diluted) | (0.05) | (6.17) | — |
| Average gross margin | 8.4% | 11.7% | — |
| SG&A expenses | 7.1% | 6.7% | — |
| (loss) a-Third-quarter results include $300,000 in restructuring charges; an income-tax benefit of $1.9 million, compared with a prior-year tax expense of $1.1 million; and a $2.9 million accretion of preferred stock. The prior-year period included a $300,000 loss from discontinued operations and a $100,000 income-tax benefit from discontinued operations. b-Nine-month results include $1.6 million in restructuring charges; a $200,000 profit from discontinued operations, compared with a year-before loss of $36.5 million; income-tax expense of $100,000 vs. a prior-year tax benefit of $12.8 million; and a $3.0 million accretion of preferred stock. The prior-year nine-month period included a $197.1 million non-cash charge stemming from a change in accounting. |
|||
