PolyOne Corporation (NYSE: POL) reported its first quarter results for 2019. Consolidated revenue for the first quarter was $900 million, flat with the prior year as growth from acquisitions of 3.5% was offset by a 1.5% reduction in organic sales and a 2% impact due to unfavorable foreign exchange.
GAAP earnings per share were $0.49 in the first quarter of 2019 compared to $0.59 in the first quarter of 2018. Adjusted earnings per share were $0.64 in the first quarter of 2019 compared to $0.68 for the first quarter of 2018.
“Like many companies in our space, we experienced weaker demand in certain end markets and unfavorable foreign exchange during the first quarter. This resulted in a year over year decline in sales and earnings,” said
Robert M. Patterson, Chairman, President and Chief Executive Officer, PolyOne Corporation. “Key drivers included lower automotive sales in Europe and China which impacted Color, Additives and Inks (Color) and Specialty Engineered Materials (SEM), and a decline in construction related sales, which primarily impacted Performance Products and Solutions (PPS) in North America.”
Mr. Patterson continued, “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. In fact, we had our best quarter ever for composites since we began investing in this space.”
Composite sales increased 10% organically driven by new business in consumer and electrical end markets. Combined with strong performance from the company’s January 2019 acquisition of Fiber-Line, composites-led growth added 17% to SEM operating income over the prior year first quarter. Fiber-Line had the best quarter in its history as a result of the continued build-out of 4G and emerging 5G network infrastructure.
Sustainable solutions include next generation packaging technologies which extend shelf-life for perishable beverages. Sales in these product applications increased 34% in China compared to the first quarter of last year.
Commenting on the company’s outlook, Mr. Patterson said, “We believe the current market challenges are temporary, and we will see a recovery in the second half of the year. While we are encouraged and optimistic, we are not waiting for market improvement to unfold. Accordingly, we have taken actions to reduce costs primarily through targeted workforce reductions and limiting discretionary spending.”
Mr. Patterson continued, “We believe these actions are prudent in the short term, but also balanced, as we are not curtailing our ability to deliver for the long term. We are continuing to invest in key end markets and innovation, and as this quarter has demonstrated, our investments in composites and sustainable solutions are paying off.”