OMNOVA Solutions Reports Second-Quarter Loss
July 8, 2008
FAIRLAWN, OH, - OMNOVA Solutions Inc. has reported a net loss of $3.1 million, or $0.07 per diluted share, for the second quarter ended May 31, 2008, compared to a net loss of $9.8 million, or $0.23 per diluted share, for the second quarter of 2007.
Net sales increased $31.7 million, to $219.7 million, for the second quarter of 2008 compared to $188.0 million during the same period a year ago. Contributing to the second-quarter increase were sales of $24.0 million from the Decorative Products Asian businesses acquired in the first quarter of 2008, favorable pricing of $11.4 million and positive foreign exchange translation of $0.1 million partially offset by net volume declines of $3.8 million. The volume declines primarily occurred in two product lines sold to the residential housing industry: Performance Chemicals' carpet business and Decorative Products' laminate business. Volume declines were partially offset by volume increases in Performance Chemicals' paper chemicals business. Excluding the Decorative Products Asian businesses, the company's sales grew $7.7 million or 4.1 percent.
Gross profit decreased $3.3 million to $33.8 million, with a gross profit margin of 15.4 percent in the second quarter of 2008, compared to $37.1 million in the second quarter of 2007. Margins declined due to higher costs for raw materials, freight and utilities, product mix issues in North America, and lower-than-average gross margins in the Asian businesses. Cost of goods sold increased as compared to the second quarter of 2007, due to manufacturing costs of the inclusion of the Decorative Products Asian businesses and higher raw material costs. Cost of goods sold was partially reduced by lower volumes and lower manufacturing expenses, primarily in North America.