Omnova Solutions Inc. says its first quarter is historically its weakest financially, and results reported Wednesday were no exception.
Shares were sold off in the $1.1 billion Fairlawn polymer, specialty chemical and decorative product company after Omnova Solutions reported a small loss for the first quarter ending Feb. 28. Results failed to meet consensus forecasts by industry analysts.
Omnova said it lost $200,000, or about break-even per share, on sales of $251.7 million for the quarter. A year ago the company had a profit of $13.5 million, or 29 cents per share, on sales of $275.9 million.
The company said it had adjusted earnings of $1.5 million, or 3 cents per share, compared to $10 million, or 22 cents per share, in the first quarter of 2012. Analysts had expected Omnova to report adjusted earnings of 9 cents per share and also expected higher revenue.
Omnova stock fell 33 cents, or 4.3 percent, Wednesday to $7.35. Shares are up 4.9 percent since Jan. 1 and are up 9.1 percent from a year ago.
The company’s top executive said he expects Omnova Solutions to have a strong finish to the year, with full-year adjusted income to exceed results from fiscal 2012.
“As we expected, operating results in our first quarter of 2013, which has been historically our weakest on a seasonal basis, were lower than last year,” Kevin McMullen, chairman and chief executive officer, said in a statement. “These results are not reflective of what we anticipate for the rest of the year. ... While we had a weak start to the quarter, we were encouraged by the profit trend as the quarter progressed, with February results significantly stronger than the prior two months.”
Omnova’s weak first quarter was due in large part because of a significant sales drop in its coat paper chemicals market late last year and because of the prolonged recession in Europe, McMullen said.
In a conference call with industry analysts, McMullen said that the improving strength in February carried into March.
“We are seeing consistently solid results from key global product lines that we’ve targeted and invested for growth,” McMullen said. “We are encouraged by the improved trend in key markets where we are well positioned, particularly the housing recovery, where we have seen a ramp up in construction in February and March. Likewise, demand for high-performance oil- and gas-drilling chemicals continues to grow globally.”
McMullen said he is excited about new products Omnova Solutions is developing, including for the oil and gas industry. The company has products that “tend to work extremely well” in offshore deep-well drilling under high pressure and high temperature conditions, he said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.