Low demand, Katrina, gas & ethylene costs disturb PolyOne's Q3 result
14 Sep '05
3 min read
Polymer compounding leader PolyOne Corporation updated its outlook for the third quarter that will end September 30, 2005. This action is part of PolyOne's efforts to inform investors at mid-quarter of any significant changes to major business drivers.
Since PolyOne reported second-quarter results on July 28, 2005, three factors are adversely affecting the outlook for the third quarter:
In North America, the anticipated increase in demand over the second quarter has not occurred.
Prior to Hurricane Katrina, natural gas and ethylene costs rose to higher-than-anticipated levels, driving higher raw material costs and placing additional pressure on product spreads (product selling prices over raw material costs).
The hurricane's immediate and longer-term negative effects from production and supply disruptions and from higher energy and derivative raw material costs are being assessed, but the full magnitude remains unknown.
Entering the quarter, PolyOne anticipated fairly stable raw material pricing and a counter-seasonal pickup in demand. Consistent with industry consensus, PolyOne's view was that the unusual decline in North American second-quarter demand was due largely to broad customer inventory reductions, and that demand would improve in the third quarter. This demand momentum has not yet materialized, and the Company now expects flat shipment volumes compared with the second quarter, rather than the 1 percent to 3 percent increase in the earlier outlook.
marketing@alchempro.com
