RPM 2Q sales rise 7.2% as profits plunge 74.1%
By Furniture Today Staff -- Furniture Today, January 23, 2005
Medina, Ohio — Finishings supplier RPM International said sales rose in its second quarter, but profits declined sharply as the company set aside reserves to cover asbestos-related lawsuits.
Revenues increased 7.2% to $623.5 million in the quarter ended Nov. 30, compared with $581.5 million in the comparable period a year ago. Net income dropped 74.1% to $9.1 million as the company put aside $47 million in legal reserves.
Same-location sales contributed more than half the sales growth, with the rest coming from acquisitions and more-favorable exchange rates with the euro and Canadian dollar.
Total sales were boosted by stronger business in RPM's industrial segment, such as wood finishes and repair kits, where revenues increased 10.5% to $364.9 million. Industrial segment sales accounted for about 59% of second-quarter sales.
Sales in RPM's consumer products business rose 2.9% to $258.6 million, but were slowed by the effects of hurricanes which struck the southeastern United States during September.
Looking ahead, RPM said it expects consumer business to pick up during the spring, and maintained forecasts for full-year revenue to grow in the high single-digit range, while earnings will increase 10% to 12%, after adjusting for asbestos-reserve charges.
RPM subsidiaries, principally Bondex, have been involved in asbestos-related suits filed primarily in state courts over the past two decades. The company concluded the $56 million remaining in the lawsuit fund likely would not suffice, and added the $47 million in the second quarter.
| RPM International | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 11/30 | 2004 | 2003 | Change |
| (a) Includes a $47 million pretax charge to increase the company's reserve for asbestos-related claims. |
|||
| Sales | $623,469,000 | $581,541,000 | 7.2% |
| Operating income | 68,654,000 | 61,320,000 | 12.0% |
| Net income | (a)9,112,000 | 35,223,000 | (74.1%) |
| Earnings per share | 0.08 | 0.30 | (73.3%) |
| 6 months ended 11/30 | 2004 | 2003 | Change |
| Sales | $1,284,982,000 | $1,162,564,000 | 10.5% |
| Operating income | 161,099,000 | 141,513,000 | 13.8% |
| Net income | (a)63,598,000 | 82,895,000 | (23.3%) |
| Earnings per share | 0.54 | 0.71 | (23.9%) |
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