Tuesday, July 03, 2001

Milacron sales drop 20 percent


Second-quarter earnings to be lower than forecast

By Mike Boyer
The Cincinnati Enquirer

        Citing one of the worst markets for plastic-making machinery in more than a quarter-century, Milacron Inc. on Monday lowered expectations for the just-completed second quarter saying its expects “to approach break-even” on a 20 percent decline in sales.

        The company, which makes plastics-processing equipment and metalworking tools and fluids, had been expected to earn from 13 to 20 cents a share, according to analysts surveyed by Thomson Financial/First Call. Milacron's shares closed Monday at $16.21, up 54 cents.

        “The drop-off in capital spending for plastics machinery is now as bad as it was in the recession of 1974, which was caused by the oil embargo and soaring energy prices,” said Ronald D. Brown, who succeeded the retired Daniel Meyer as Milacron's chair man and chief executive at the end of May.

        For example, he told investors in a telephone conference call that one industry research firm, which had been forecasting a 1 percent decline in shipments of all plastic products this year in the United States, is now forecasting a 3 1/4 percent decline.

        “This decline is in a industry that even in a bad year normally shows 1 to 2 percent year-over-year growth,” he said.

        Because of slower demand from North American automakers, Milacron also said operating earnings from its metalworking technologies unit will be about $8 million in the second quarter, down from $16 million a year ago.

        Milacron said overall sales for the second quarter will be in the range of $310 million to $330 million, about $80 million less than a year ago, and operating earnings will be about $30 million less than the same period last year. The company expects to approach break-even for the period as result of tax benefits and a gain on the sale of its former Oakley headquarters.

        To compensate for the slower business activity, Mr. Brown said, Milacron has trimmed its worldwide payroll of 5,000 by 15 percent, or 750 jobs, since the start of

        the year. That includes about 150 jobs cut in mid-May at its plastics division headquarters in Batavia and nearby Mount Orab. The company, which has implemented rotating furloughs in a number of operations, also has cut about eight positions at its corporate headquarters staff in Walnut Hills through early retirements, a spokesman said.

        Mr. Brown said the company also has saved about $20 million this year through other cost cut ting.

        But he cautioned that unless the market improves in the next month or so Milacron “will likely take further cost-cutting action to help future profitability.” A spokesman said it was premature to say what those steps might include.

        Given the current market, Mr. Brown said the company expects the third quarter will look much like the second quarter. The company will report second-quarter results July 27.

       



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