BEACHWOOD, Ohio—Omnova Solutions Inc.'s 2014 fourth quarter results were mixed: net income was down compared with those recorded in the same period in 2013 while net sales rose for the period.
Net income came in at $5.1 million, a drop from earnings of $7.9 million in the prior year. Sales for quarter increased 3.7 percent to $243 million.
“Overall, fourth quarter results were in line with our anticipated performance,” Kevin McMullen, chairman and CEO of Omnova, said in a statement. “We have taken and will continue to take decisive actions to respond to recent market declines in our traditional core businesses, specifically those serving the North American paper and carpet markets.”
He said he was encouraged to see volumes and profitability in the company's traditional core businesses stabilize in the quarter compared to 2013. He noted that volumes in the firm's higher margin specialty chemical businesses of oil and gas, specialty coatings, nonwovens and elastomeric modifiers were also favorable.
Omnova is zeroing in on those areas of its operation where business has slowed.
On Jan. 1, or as soon as contracts allow, the company hiked prices for all latex products sold in North America by 3 cents a pound.
McMullen said he was also pleased that the restructuring actions in the company's Engineered Surfaces segment are driving strong margin expansion and improved cash generation. “Over the past three years,” he said, “we sold the commercial wall covering business, consolidated capacity by closing the Columbus, Miss., manufacturing facility, prioritized our target markets, enhanced new product development, entered new adjacent markets and bolstered our management talent.”
In addition, Omnova is taking major actions in its Performance Chemicals business under new President Anne Norton, who joined the company early in the fourth quarter, he said. “We are implementing fundamental changes to address the challenging market dynamics of our traditional core businesses, which primarily result from a structural decline in recent years in the publication paper business and a deep, prolonged cyclical decline in the carpet business.
He said the company is reducing its excess production capacity through aggressive permanent repurposing of some manufacturing assets. The actions benefit the firm by reducing its dependence on traditional core businesses and supporting growth in its specialty businesses, he said.
Most recently, Omnova said it would end polymer production at its Akron plant by the middle of 2015, which it said will save the company $4 million annually. Once that's done, it will cut North American SB capacity by 120 million pounds, or about 15 percent of its total capacity.
It also brought in consultants to take a comprehensive look at its network of facilities to further optimize its industrial footprint, McMullen said.