Schulman says troubles in Europe weigh on results

Schulman points to woes in Europe for disappointing 2Q; lowers full-year forecast

Associated Press

AKRON, Ohio (AP) -- Economic troubles in Europe weighed on A. Schulman Inc.'s fiscal second-quarter results and the company lowered its earnings outlook for the year on Monday.

The company, based in Akron, Ohio, is a supplier of plastic compounds and resins.

Joseph Gingo, A. Schulman's chairman, president and CEO, said that after several months of relative stability in its European markets, the company now believes that its business there is going through another difficult period due to growing economic uncertainties in the region. It is also said that it is facing increasing competition on price from its peers.

The company had already cut jobs, begun to consolidate some manufacturing facilities and made other changes to put itself in a better financial position. It said Monday that it may cut costs further and is looking at other consolidation efforts in response to weak demand.

It expects to recognize additional restructuring and accelerated depreciation charges totaling approximately $1.5 million during the remainder of fiscal 2013. As a result, the company anticipates saving $1.4 million on an annual basis once the plan is fully implemented.

It also plans to reorganize some of its business operations in Europe to address the challenges there.

Schulman's news came as that company reported net income of $11.8 million, or 40 cents per share, for the period that ended Feb. 28. That is compared with $9.1 million, or 31 cents per share, earned in the prior year. It earned 27 cents per share versus 38 cents per share on an adjusted basis.

The company's revenue increased 5 percent to $522.4 million from $495.9 million, due largely to recent acquisitions.

Analysts polled by FactSet were expecting the company would earn an adjusted 39 cents per share on revenue of $526.4 million.

Schulman's revenue from the Americas segment increased 11 percent to $144.2 million. Its revenue from the Europe, Middle East and Africa region increased 3 percent to $342.2 million and its revenue in the Asia Pacific region increased nearly 7 percent to $36 million.

"Although we are not encouraged by the global economic environment and its impact on the plastic compounding industry, as we have successfully demonstrated in the past we will aggressively manage what we can control while driving growth through new products and value-generating acquisitions, including expansion into adjacent markets," Gingo said.

The company expects its results will improve in the second half of the year but said weak global demand has made it cautious. As a result, the company lowered its full-year earnings forecast to a range of $2.08 to $2.13 per share for the year versus a forecast in January of adjusted earnings of $2.14 to $2.19 per share. Analysts had forecast adjusted earnings of $2.15 per share for the year.

Shares of the company fell 6 percent in after-hours trading to $28 on the news. Its stock price fell 34 cents to close regular trading at $29.75

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