Milacron sales down 20% in 2001

Milacron Inc., Cincinnati, OH, reported that sales for 2001 of $1.26 billion and new orders of $1.22 billion were each down about 20% from 2000 levels. The net loss for the year was $35.7 million of which $19.1 million represented restructuring charges. Excluding restructuring charges, Milacron lost $16.6 million in 2001. This compared to net earnings of $72.3 million in 2000.

Sales in the fourth quarter of 2001 were $306 million, down 21% from $389 million in the fourth quarter of 2000. New orders were $286 million, off 23%. The net loss of $21.9 million included $11.3 million in restructuring charges related to plant closings and employee reductions. Excluding restructuring charges, Milacron lost $10.6 million in the quarter. In the fourth quarter of 2000, the company had net earnings of $22.0 million.

During the fourth quarter, Milacron reduced inventory by $52 million, resulting in a positive net cash flow from operations of $42 million and boosting its cash position to $110 million.

'All of our operations continued to be affected by severely depressed market conditions in North America as well as economic softening in Europe and parts of Asia,' said Ronald D. Brown, chairman, president and CEO.

Segment Results

Metalworking Technologies. Sales in the quarter were $140 million, off 16% from $167 million in the year-ago quarter, and new orders declined 21% to $133 million. The group posted a slight operating loss of $1.1 million in the quarter, compared to operating earnings of $21.1 million in the year-ago period. For 2001, the group's sales were $600 million, down 15% from 2000, while new orders fell 17% to $594 million. Operating earnings for the year fell to $19.9 million from $70.7 million a year ago.

Plastics Technologies. Sales in the fourth quarter of 2001 were $165 million, down 26% from $222 million a year ago. New orders were $153 million, off 25%. Due in great part to major sales declines in its machinery businesses, the group incurred an operating loss of $10.2 million. This loss included a $4.6-million write-down of certain assets associated with the consolidation of European blow molding manufacturing operations. Operating earnings in the year-ago quarter were $22.8 million. For the year 2001, plastics technologies sales were $662 million, down 24% from 2000, while orders fell 25% to $629 million. For the year, the group's operating loss was $9.9 million compared to operating earnings of $97.0 million in 2000.

Restructuring and Cost Cutting

Milacron is in the midst of a major restructuring program that specifies the closing of 14 small manufacturing plants and the elimination of about 1,150 jobs. Having begun this restructuring in the third quarter of 2001, the company significantly expanded the program in response to weakening markets in Europe and expects to complete the bulk of the actions by mid 2002. Charges for the entire program are projected to total approximately $38 million pre-tax, while cash costs are estimated at about $32 million. All told, the plan is expected to generate cost savings of more than $40 million annually.

Fourth-quarter restructuring activities included four plant closings, the elimination of more than 300 positions and cash costs of $9 million. For the year 2001, the restructuring program resulted in six plant closings, the elimination of a total of 480 jobs and cash costs of $10.5 million.

This restructuring program followed earlier cost-cutting measures taken in the first half of 2001, which included the elimination of 750 positions in North America and the consolidation of blow molding machine manufacturing operations in Europe.

Outlook

'We believe the manufacturing recession in North America is beginning to bottom out,' CEO Ron Brown said. 'For 2002 as a whole, assuming some gradual improvement in economic conditions, combined with the successful execution of our cost-cutting and restructuring plans, we believe we can return to profitability in the second half and break even for the year, excluding nonrecurring charges.'