Industrial Engineered Products Division Summary
Here are some excerpts from the June 30, 2009 10-Q related to the IEP division which includes the PVC additives segment. Based on the following information it would appear that the company is trying to target this division for a turnaround. The IEP division is the only one out of the 4 major divisions that experienced an operating loss during the last quarter and 6 months ended June 30, 2009.
“Industrial Engineered Products are chemical additives designed to improve the performance of polymers in their end-use applications. Industrial Engineered Products include brominated performance products, flame retardants, fumigants, organometallics (polymerization additives and intermediates), PVC additives and surfactants. The products are sold across the entire value chain ranging from direct sales to monomer producers, polymer manufacturers, compounders and fabricators, fine chemical manufacturers and oilfield service companies to industry distributors.”
“The primary economic factors that influence the operations and sales of the Company’s Industrial Performance Products and Industrial Engineered Products segments are industrial production, residential and commercial construction, electronic component production and polymer production. “
“For PVC Additives, a component of the Industrial Engineered Products reporting segment, the long-lived assets were in excess of the undiscounted cash flows. As a result, the Company recorded a pre-tax impairment charge of $60 million to write-down the value of property, plant and equipment, net by $48 million and intangible assets, net by $12 million as of June 30, 2009. The $60 million charge is included within impairment of long lived assets in the consolidated statements of operations.”
“Net sales in the Industrial Engineered Products segment decreased by $136 million to $188 million for the second quarter of 2009 compared with $324 million in the same quarter in 2008. The operating loss of $11 million reflected a reduction of $36 million compared with a $25 million operating profit for the second quarter of 2008.
The decrease in net sales reflects a reduction of $126 million in sales volume, a $6 million reduction in selling prices and $4 million impact of unfavorable foreign currency translation. Products sold to electronic, building and construction, and consumer durable polymer applications continued to show the most dramatic year-over-year reductions from the impact of the global recession. Nevertheless, demand showed modest improvement compared with the first quarter of 2009 as the most significant effects of inventory de-stocking abated.”
Operating loss for the second quarter of 2009 reflected a $22 million impact due to lower volume and unfavorable product mix, a $20 million impact of unfavorable manufacturing costs (primarily due to lower plant utilization) and a $6 million impact from lower selling prices. These decreases in operating profit were partially offset by a $4 million reduction in raw material and energy costs, a $3 million reduction in distribution costs and a $5 million benefit from SGA&R and other cost reductions."
“Net sales in the Industrial Engineered Products segment decreased by $306 million to $345 million for the six month period ended June 30, 2009 compared with $651 million in the same six month period in 2008. The operating loss of $32 million for the six month period ended June 30, 2009 reflected a deterioration of $60 million compared with the $28 million operating profit for the same six month period of 2008.
The decrease in net sales reflects a decline in sales volume of $268 million, a $31 million reduction due to the divestiture of the oleochemicals business in February 2008 and $7 million impact from unfavorable foreign currency translation. Operating loss for the six month period ended June 30, 2009 reflected a $55 million reduction due to lower volume and unfavorable product mix, $38 million in unfavorable manufacturing costs (primarily due to lower plant utilization), $2 million from unfavorable foreign currency translation and a $2 million decrease in equity income. These decreases in operating profit were partially offset by a $14 million reduction in accelerated depreciation of certain assets, a $5 million reduction in distribution costs, a $3 million decrease in raw material and energy costs and a $15 million benefit from SGA&R and other cost reductions.”
“Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to…
The ability to successfully complete the turnaround of our Industrial Engineered Products segment…”
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