AVON LAKE, Ohio—Challenging financial results are leading PolyOne Corp. to reduce spending and to cut an unspecified number of jobs.
Based in Avon Lake, PolyOne, one of North America's largest compounders, concentrate makers and resin distributors, had a tough first quarter for 2019, with sales flat and profit down almost 20 percent.
"We believe the current market challenges are temporary, and we will see a recovery in the second half of the year," Robert Patterson, chairman, president and CEO, said in an April 17 news release.
"While we are encouraged and optimistic, we are not waiting for market improvement to unfold," he added. "Accordingly, we have taken actions to reduce costs primarily through targeted workforce reductions and limiting discretionary spending."
PolyOne posted sales of a nearly $900 million for the first three months of the year, roughly equal to results from the year-ago period. Company officials said in the release that acquisition-related sales growth of 3.5 percent was canceled out by a 1.5 percent organic sales decline and a decline of 2 percent from unfavorable exchange rates.
PolyOne's net income for the three months, however, slipped almost 20 percent to $38.2 million. Operating income also declined more than 13 percent to $68.3 million.
"Like many companies in our space, we experienced weaker demand in certain end markets and unfavorable foreign exchange during the first quarter," Patterson said.
Patterson added that key drivers for PolyOne's first-quarter results included lower automotive sales in Europe and China which impacted the firm's Color, Additives & Inks and Specialty Engineered Materials units, as well as a decline in construction related sales, which primarily impacted its Performance Products & Solutions unit in North America.
"These headwinds were partially offset by favorable product mix and margin expansion in distribution, as well as new business gains in composites and sustainable solutions," he said. "In fact, we had our best quarter ever for composites since we began investing in this space."
First-quarter SEM sales jumped almost 16 percent, with distribution sales—including third-party resins and compounds—up almost 1 percent. But PPS sales, including PVC compounds, were down 11.5 percent and color sales declined almost 3 percent.
In first-quarter operating income, PPS tumbled 33 percent, with color down 6 percent. But distribution operating income was up 7 percent and SEM was up almost 6 percent.
On Wall Street, first-quarter results sent PolyOne's per-share stock price down almost 6 percent to $29.20 in mid-day trading April 17.