A. Schulman reports improved fiscal 2010 first-quarter results.
In the fiscal 2010 first quarter (from November), A. Schulman’s sales in Europe were $271.9 million, a decrease of $8.9 million or 3.2% compared with the prior-year period. Tonnage for the quarter decreased 2.9%; the translation effect of foreign currency, primarily the euro, increased sales by 5.3%; and changes in prices and product mix decreased sales by 5.6%. The price decline was related to significant declines in resin prices.
Gross margin improved to 18.6% of sales for the quarter compared with 12.2% for the same period last year. The improved gross margin was driven by mix, both by business and product lines, and the realization of cost-reduction initiatives. The prior year’s quarter, which was severely impacted by the financial downturn, also included a charge of $3.0 million for lower of cost or market inventory adjustments. Operating income for the fiscal 2010 first quarter was $25.2 million compared with $14.0 million in the same quarter last year. Foreign exchange accounted for $1.4 million of the increase.
North America earned a combined $2.9 million during the quarter, an impressive turnaround of $5.2 million from last year’s first-quarter loss of $2.3 million. Although volume was down 17.8% from the fiscal 2009 first quarter, reflecting the company’s efforts to eliminate low-margin capacity and the continued effect of weak economic conditions, gross margin increased to 13.0% of sales from 7.0% of sales for the prior-year period. A yearover- year reduction of $2.1 million in SG&A also contributed to the profit increase.
Sales in Asia were up almost 60% for the quarter compared with the same period last year as tonnage almost doubled. Gross margin increased to 18.3% of sales compared with 7.8% for the prior-year period. The increase in gross margin reflects a favorable product mix; results of the company’s continuous efforts to reduce higher-cost inventories; and a much more optimal capacity utilization of 86%. Operating income was $1.1 million compared with an operating loss of $0.1 million for the prior-year quarter, continuing the positive trend that began during the third quarter of 2009.
- While we are pleased to see our strategy pay off in North America’s return to profitability, we are also experiencing a recovery in Europe despite volumes that are essentially flat compared with a year ago - Gingo said. - We continue to see strong improvement in Asia as a result of our increased focus on our growth strategy for that region.
The current European, Asian and North American market position of A.Schulman