FAIRLAWN, Ohio—Omnova Solutions Inc. recorded an increase in net income but a drop in sales in the second quarter.
Net income came in at $3.4 million in the quarter, up from $2.9 million in 2013's second period, on sales of $4.4 million, a 1.6 percent decrease from last year.
The sales decline was a result of reduced pricing of $9.4 million, which was partially offset by volume increases of $4.4 million and favorable currency translation. Customer-driven logistics issues also led to lower sales and higher operating costs.
“Overall, second quarter results were below what we had expected,” Chairman and CEO Kevin McMullen, said. “Positive items included improved Performance Chemicals' volumes and strong laminates sales in Engineered Surfaces, but these were offset by approximately $2.5 million of negative operating profit impact from temporary customer-driven delays in shipments and higher logistics costs.”
He said that weaker Asian demand and competitive challenges in the company's North American Performance Materials operation's products also had an adverse profit impact compared to last year.
Looking ahead, McMullen said Omnova has a strong backlog in the oil and gas sector, specialty architectural and industrial coating chemicals, and in laminates, “while we continue to work on accelerating a number of key improvements in the firm's Performance Chemicals unit. Those include the ramp-up of new specialty chemicals manufacturing capabilities and new product qualifications in China and Europe.
“In North America, Omnova's ongoing program to rationalize styrene butadiene capacity and repurpose those assets to produce other chemistries for growth markets is on track to be completed at year end.”