Higher costs slow Noveon’s advance

Patrick Raleigh UT On-line news editorCleveland, Ohio-Noveon Inc.'s polyurethane-related businesses-TPUs and coatings-were held back by pricing pressures and higher raw material and utility costs in 2003, the company said 18 Feb."Significantly higher raw material costs overshadowed an excellent year for Noveon," said Steve Demetriou, Noveon president and chief executive officer. The year included "a resurgence in Estane TPU, and excellent results from our on-going productivity initiatives," he added in a press statementNoveon only issued details of sales and earnings by business segment for the fourth quarter to 31 Dec 2003. Over the three months, Noveon's Specialty Materials segment, which consists of the group's Estane TPU and chlorinated PVC (CPVC) businesses, reported an 8-percent rise in earnings (EBITDA) to $27.7 million. Segment sales came in at $110.3 million, 14 percent higher than in the fourth quarter of 2002.TPU sales "benefited from continued growth in Asia and higher demand in static-control materials from electronics-related customers," as well as the recent acquisition of an aliphatic TPU product line, and the stronger Euro, said Noveon.The higher fourth quarter earnings reflected higher volumes across the segment and lower manufacturing costs. These gains were partially offset by higher raw material and utility costs and competitive pricing pressure in the TPU and CPVC product lines, the Cleveland-based group added. At Noveon's Performance Coatings unit, fourth quarter EBITDA fell 20 percent to $14.4 million, due to higher raw material and utility costs, and despite a 7-percent rise in sales to $92.0 million. For the final quarter of 2003, Noveon posted restructuring costs of $13.2 million, mostly for the consolidation of a polyurethane dispersion plant in Leominster, Massachusetts, into its Avon Lake, Ohio facility."In the fourth quarter, we [Noveon group] saw signs of a stronger business environment with sequential sales growth over the third quarter. Higher volumes across most of the company resulting from our focus and commitment to new product development, bolt-on acquisitions and the stronger euro, drove our top line," Demetriou commented."