PolyOne Updates Second Half 2008 Outlook
September 16 2008 - 6:00PM
PR Newswire (US)
CLEVELAND, Sept. 16 /PRNewswire-FirstCall/ -- PolyOne Corporation
(NYSE: POL) today updated its outlook for the second half of its
fiscal year ending December 31, 2008. The Company expects second
half consolidated sales growth of 8-10% versus the second half of
2007, below management's previous expectation of 15% sales growth.
This revision is largely driven by the following factors,
including: -- Weakened European demand, previously mentioned in
PolyOne's August 7, 2008 earnings release, has worsened. --
European sales growth is expected to be further reduced by the
recent weakening of the Euro which has lost approximately 10% of
its value relative to the U.S. Dollar. -- Demand and pricing trends
in the North American housing and automotive markets are more
challenging than expected in the Company's Performance Products and
Solutions segment. In addition, the Company temporarily shut down
production at two of its facilities in Texas as a direct result of
Hurricane Ike. While the Company expects its affected plants to be
operational by the end of this week, the full impact that the
hurricane has had on customers and suppliers is not yet clear. The
Company expects it will experience customer order delays and is
already aware of logistic disruptions related to the supply of raw
materials. "First and foremost, we're relieved to report that our
employees and their families were unharmed," said Stephen D.
Newlin, chairman, president and chief executive officer. "We
exercised the appropriate safety precautions by closing our plants
in advance of the hurricane, and we are now working to restore
power and repair what appears to be only minor facility damage. We
are concerned about potential delays in customer orders and raw
material supply directly related to the storm." Commenting on the
trends noted above, Mr. Newlin added, "August was a difficult month
and early indications are that these industry conditions may
continue. Furthermore, while the end result of the unprecedented
financial industry crisis and ongoing tight credit policy in the
U.S. has not fully played itself out, it is reasonable to expect
that it will provide further headwind to near-term economic
growth." Newlin further stated, "During our second quarter 2008
earnings conference call we noted our concern about a possible
slowdown in Europe however at that time we did not yet have
visibility relative to the magnitude of any such decline which is
now becoming apparent." Discussing North America conditions, Mr.
Newlin continued, "We are disappointed that PolyOne has thus far
been unable to capture meaningful selling price improvement in our
Performance Products and Solutions segment, despite unprecedented
increases in raw material and energy costs. While oil and natural
gas prices have recently declined, we have not been a beneficiary
of this trend, and we further believe that end users were shielded
from much of the previous increases in raw material and energy
costs by compounders like PolyOne, who have so far absorbed much of
these elevated costs." The Company expects earnings from its
SunBelt joint venture to benefit from favorable caustic soda price
trends which are expected to more than offset weak end-market
demand for chlorine derivatives. However, some of this benefit may
be offset by potential delays in customer orders as a result of
Hurricane Ike. Corporate costs are expected to be lower than
previously forecasted as a result of reduced incentive accrual
estimates. Senior vice president and chief financial officer Robert
M. Patterson said, "It's unfortunate that our increasingly
successful specialty business focus and growth initiatives are
being temporarily overshadowed by weak end- market demand and
unfavorable pricing dynamics. Clearly we made the right decision in
July to close certain of our manufacturing facilities and reduce
overall manufacturing capacity. We will be focusing our efforts on
accelerating these previously announced actions to help offset the
headwinds outlined above." Patterson added, "As a result of the
business interruption related to the hurricane and the unfavorable
trends observed in our Performance Products and Solutions segment
and Europe, we expect it will be a challenge to reach consensus
expectations of $0.13 per share for the third quarter, before
special items. Further, it is difficult to forecast our results for
the year given the number of uncertainties in the market, and
therefore we are projecting a range of performance between $0.36
and $0.41 per share before special items for the fiscal year ending
December 31, 2008." Additional considerations -- The Company
expects third quarter special items to approximate $0.17 - $0.19
per share. The majority of these costs relate to the previously
announced manufacturing realignment, although the Company also
expects to record incremental legacy environmental costs that
increased as a result of higher utility cost estimates necessary to
support remediation. -- Net interest expense for the remainder of
the year is expected to approximate the second quarter run-rate, as
anticipated debt reductions will occur toward the end of the year.
-- The Company anticipates an effective tax rate between 33% and
35% for the second half of 2008. Third Quarter 2008 Earnings
Release and Conference Call PolyOne intends to release its third
quarter earnings and host a conference call at 9:00 a.m. Eastern
time on Wednesday, November 5, 2008. The conference dial-in number
is 866-543-6403 (domestic) or 617-213-8896 (international),
passcode 55915037, conference topic: Third Quarter 2008 PolyOne
Earnings Conference Call. The replay number is 888-286-8010
(domestic) or 617-801-6888 (international). The passcode for the
replay is 19198595. The call will be broadcast live and then be
available via replay until Wednesday, November 12, 2008, on the
Company's Web site at http://www.polyone.com/. About PolyOne
PolyOne Corporation, with annual revenues of more than $2.7
billion, is a premier provider of specialized polymer materials,
services and solutions. Headquartered outside of Cleveland, Ohio
USA, PolyOne has operations around the world. For additional
information on PolyOne, visit our new Web site at
http://www.polyone.com/. Forward-looking Statements In this press
release, statements that are not reported financial results or
other historical information are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward- looking statements give current expectations or
forecasts of future events and are not guarantees of future
performance. They are based on management's expectations that
involve a number of business risks and uncertainties, any of which
could cause actual results to differ materially from those
expressed in or implied by the forward-looking statements. You can
identify these statements by the fact that they do not relate
strictly to historic or current facts. They use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," and other words and terms of similar meaning in
connection with any discussion of future operating or financial
performance and/or sales. In particular, these include statements
relating to future actions; prospective changes in raw material
costs, product pricing or product demand; future performance;
results of current and anticipated market conditions and market
strategies; sales efforts; expenses; the outcome of contingencies
such as legal proceedings; and financial results. Factors that
could cause actual results to differ materially include, but are
not limited to: -- the effect on foreign operations of currency
fluctuations, tariffs, nationalization, exchange controls,
limitations on foreign investment in local businesses and other
political, economic and regulatory risks; -- changes in polymer
consumption growth rates within the U.S., Europe or Asia or other
countries where PolyOne conducts business; -- changes in global
industry capacity or in the rate at which anticipated changes in
industry capacity come online in the polyvinyl chloride (PVC),
chlor-alkali, vinyl chloride monomer (VCM) or other industries in
which PolyOne participates; -- fluctuations in raw material prices,
quality and supply and in energy prices and supply, in particular
fluctuations outside the normal range of industry cycles; --
production outages or material costs associated with scheduled or
unscheduled maintenance programs; -- the cost of compliance with
environmental laws and regulations, including any increased cost of
complying with new or revised laws and regulations; --
unanticipated developments that could occur with respect to
contingencies such as litigation and environmental matters,
including any developments that would require any increase in our
costs and/or reserves for such contingencies; -- an inability to
achieve or delays in achieving or achievement of less than the
anticipated financial benefit from initiatives related to cost
reductions and employee productivity goals; -- an inability to
raise or sustain prices for products or services; -- an inability
to maintain appropriate relations with unions and employees in
certain locations in order to avoid business disruptions; -- any
change in any agreements with product suppliers to PolyOne
Distribution that prohibits PolyOne from continuing to distribute a
supplier's products to customers, and -- other factors affecting
our business beyond our control, including, without limitation,
changes in the general economy, changes in interest rates and
changes in the rate of inflation. We cannot guarantee that any
forward-looking statement will be realized, although we believe we
have been prudent in our plans and assumptions. Achievement of
future results is subject to risks, uncertainties and inaccurate
assumptions. Should known or unknown risks or uncertainties
materialize, or should underlying assumptions prove inaccurate,
actual results could vary materially from those anticipated,
estimated or projected. Investors should bear this in mind as they
consider forward-looking statements. We undertake no obligation to
publicly update forward-looking statements, whether as a result of
new information, future events or otherwise. You are advised,
however, to consult any further disclosures we make on related
subjects in our reports on Form 10-Q, 8-K and 10-K that we provide
to the Securities and Exchange Commission. You should understand
that it is not possible to predict or identify all risk factors.
Consequently, you should not consider any list to be a complete set
of all potential risks or uncertainties. (Ref. #32108) DATASOURCE:
PolyOne Corporation CONTACT: Investors, Robert M. Patterson, Senior
Vice President and Chief Financial Officer of PolyOne Corporation,
+1-440-930-3302, Web site: http://www.polyone.com/
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