BEACHWOOD, Ohio—The recent move to new headquarters in Beachwood will represent a fresh start for Omnova Solutions Inc., said Kevin McMullen, chairman, president and CEO.
The maker of specialty chemical and emulsion polymers could use it, as the company is forging ahead with a number of growth initiatives after what McMullen called a disappointing third quarter, in which the company posted net income of $1.8 million, or 4 cents per diluted share, compared with earnings of $9 million, or 19 cents per diluted share, in the like period a year ago.
McMullen said the biggest driver of the 80 percent drop in net income was the company's legacy, core business—paper coatings.
Demand for paper coatings is dropping as the trend moves toward electronic media. Omnova doesn't report paper coatings separately, but sales in the Performance Materials product line, which also includes carpet latex, made up about 25 percent of the company's sales in the quarter, the company said in an email.
McMullen said the company is seeing growth in some of its specialty businesses, and it's looking to grow those segments at a faster rate in the future.
Those product lines include chemicals for oil and gas drilling, a relatively new segment for Omnova. McMullen said the specialty coatings business for products ranging from masonry to metals to garage floors also is strong, as is the engineered surfaces business. The company is a big player in the kitchen cabinet market, McMullen said, and it sees growing opportunities in retail display.
McMullen also expects Omnova's nonwovens business to grow, though it underperformed in the third quarter. The company provides a binder that's used in towels, wipes and diapers.
He expects growth in the diaper and adult incontinence product markets: emerging markets with growing middle classes have a greater need for diapers, while areas without large birth rates have a growing need for the adult products. And the company plans to watch for medical and filtration opportunities in this segment in the future.
Omnova also is investing in its plants, repurposing those making less successful products to support areas of growth. In the company's North American coated business, McMullen said there is an overcapacity of styrene butadiene, which is used in a variety of the company's businesses to help with qualities like binding, water resistance and gloss.
For instance, the company is converting excess styrene butadiene capacity at its plant in Mogadore to hollow plastic pigment, which an email from the company noted is being used for specialty paper and packaging applications, markets with more stability than publication papers. The company also is moving some operations from its Akron plant, which will still be used as a finishing facility, to the converted Mogadore location. In all, the changes are expected to save the company $4 million each year.
Omnova is adding capacity in the growing Asian market, including at its plant in Caojing, China, which has been running since 2011. The plant gives the company the opportunity to support customers locally. Omnova also has plants in China, India and Thailand.
“That's a big opportunity for us,” McMullen said.