Home / Knowledge / News / Textiles / 2009 cost reductions now expected to exceed $23 mn - OMNOVA
2009 cost reductions now expected to exceed $23 mn - OMNOVA
30
Sep '09
OMNOVA Solutions Inc reported net income of $10.1 million, or $0.23 per diluted share, for the third quarter ended August 31, 2009, compared to net income of $3.1 million, or $0.07 per diluted share, for the third quarter of 2008. Included in the third quarter of 2009 were restructuring and severance charges of $0.3 million and flood-related expenses of $0.6 million.

Net sales decreased $53.4 million, or 22.3%, to $186.1 million for the third quarter of 2009, compared to $239.5 million for the third quarter of 2008. The third quarter decrease in sales was the result of lower selling prices and weak market demand, which were partially offset by market share gains and penetration into new adjacent markets. Gross profit improved to $44.0 million, with margins of 23.6%, in the third quarter of 2009, compared to $39.1 million, and margins of 16.3%, in the third quarter of 2008. The margin improvement was due primarily to lower raw material costs and reduced manufacturing expenses.

"Our improved third quarter performance reflects the impact from a number of positive ongoing actions being taken by the Company, including broad-based cost reductions now totaling more than $23 million for the year, effective raw material sourcing and commercialization of innovative new products," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer. "Our Performance Chemicals segment and Decorative Products Asian businesses led the Company's overall improvement. The actions taken by the Company led to significantly higher earnings and positive cash flow from operations, which allowed us to further reduce our debt and increase the Company's financial flexibility.

"Entering our fourth quarter, overall market demand in Decorative Products appears to be bottoming. Volumes in Performance Chemicals are expected to be up year-over-year for the fourth quarter but down modestly on a sequential basis, as is typical, compared to the third quarter. Because of the initiatives we have taken and continue to take, the Company expects to continue to generate significantly improved year-over-year earnings in the fourth quarter," McMullen added.

Selling, general and administrative expense in the third quarter of 2009 fell to $25.7 million, compared to $26.7 million in the third quarter of 2008. Interest expense in the third quarter of 2009 was $2.0 million, a decrease of $1.0 million compared to the third quarter of 2008, as a result of lower average interest rates and debt. The weighted average cost of borrowing during the third quarter of 2009 was 4.6%, an improvement from 5.5% in the third quarter of 2008. The Company's tax benefit and expense for the third quarter of 2009 and 2008 is substantially lower than its statutory rate primarily due to the Company's available net operating loss carryforwards.

The Company's Net Debt was $122.7 million at August 31, 2009, a decline of $18.3 million during the quarter and a reduction of $67.4 million over last year. Debt of $144.6 million was comprised of a term loan facility with $142.7 million outstanding which matures in 2014, and $1.9 million in short-term debt, primarily in Asia. As of August 31, 2009, the Company's revolving asset-based credit facility was not being used and available borrowing capacity was $65.6 million. The quarter-end consolidated cash balance grew to $29.6 million.


Must ReadView All

Textiles | On 25th Sep 2017

SVP Group to build $300 mn spinning plant in Sohar

ShriVallabh Pittie Industries (SVP) Group, a diversified yarn...

Apparel/Garments | On 25th Sep 2017

Vietnam textile sector to gain if EU FTA gets ratified

Experts feel the Vietnam-European Union (EU) free trade agreement...

Courtesy: Business Wire

Textiles | On 25th Sep 2017

Invista to use ADN technology at joint project in France

Invista, a leading producer of chemical intermediates, polymers, and...

Interviews View All

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Priyanka
Studio Priyanka Rajiv

‘To reinvent the age-old tradition of embroidery to suit demographics and...

Ajay Ghariwala
Luthra Group

We are ready to adopt or follow every opportunity

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

September 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
74.5%
No
12.8%
Skip
12.8%

Total Votes: 47

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
61.7%
No
25.5%
Skip
12.8%

Total Votes: 47

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.2%
No
6.4%
Skip
6.4%

Total Votes: 47

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
70.2%
No
10.6%
Skip
19.1%

Total Votes: 47


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search