Milacron says globalisation paying off

Action taken last year will allow the business “to be profitable despite the market”.
 

Milacron lost money again in 2007 but officials said ongoing globalisation moves are helping the Cincinnati, US, based plastics machinery maker offset problems in the North American market.

The market has been slammed by downturns in the automotive and construction industries. Ronald Brown, chairman, president and ceo, said Milacron’s sales to markets outside of the United States, Canada and Western Europe jumped more than 20% in 2007, and now account for about 25% of sales.

Brown said, “Our efforts to expand Milacron’s presence in faster-growing markers of the world are also paying off”.

Milacron issued its year-end results on 25 February. The maker of injection presses, blow molding machines, extruders, structural foam machines and industrial fluids lost $88.8m (€58m) in 2007. Most of the loss was because of a $63m (€41m) write-down of tax assets and restructuring charges of $12.5m (€8.2m).

In 2006, Milacron lost $39.7m (€26m), which included $19.2m (€12.6m) in restructuring costs and refinancing charges. The last time Milacron made a profit was 2000.

Sales also declined in 2007, to $808m (€531m) from $820m (€538m) in 2006. New orders were flat, although Brown said Milacron has a strong backlog going into 2008.

Despite the numbers, Brown said the company’s financial picture is improving. It turned in operating earnings of $3.1m (€2m) for 2007, after posting an operating loss of $7.2m (€4.7m) the year before. He added that Milacron continued to look at ways to cut costs, through global sourcing and equipment design, to offset increasing prices for steel and other raw materials.

Brown said in the fourth quarter, manufacturing margins and operating cash flow “are both up significantly from the year-ago quarter”.

Milacron is facing “severe declines” in injection presses and mould technologies in its home market of North America in 2007, Brown said. To soften the impact, Milacron focused on aftermarket sales – which approached $200m (€131m) and grew to represent 36% of total machinery sales.

Brown said Milacron is not expecting any North American market growth in 2008. But he said that cost cuts, such as global sourcing and the move to freeze the pension plan late last year, can help on the earnings side.

In the 25 February conference call, a financial analyst asked Brown if Milacron can turn a profit in North America this year. He said: “The actions we took in 2007 to reduce the cost structure there will be able to enable that business to be profitable despite the market.”

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