Milacron reports higher sales and orders

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Milacron Holdings Corp. reported higher sales in the first quarter of 2017, and a big jump in orders, but a loss of $24.6m (€22.6m).

CEO Tom Goeke said Milacron enjoyed first-quarter growth in consumables. Sales in the company's melt control and delivery systems unit, increased 6.6%, to $99.8m (€92m), or 9.7% in constant currency.

That segment includes hot runners, mould bases and components, process control systems and aftermarket parts.

“Our core strategy is to drive our large installed base to drive our consumables business,” Goeke said in a 27 April conference call with financial analysts. He said the company had a strong quarter for consumables in most regions of the world, with widespread strength in hot runners especially in Europe and China.

But Goeke said plastics machinery sales are still flat for Milacron in US market, which accounts for more than 50% of sales. The company's advanced plastic processing technologies segment reported sales of $156m (€143m), about the same as the first quarter of 2016.

“The North American equipment market continues to be the softest part of our portfolio,” Goeke said.

Bruce Chalmers, vice president of finance and chief financial officer, said North America had strong aftermarket growth, while processing equipment continued to grow in India.

Overall sales for the quarter were $285.4m (€262m), an increase of 2.9% from the year-ago first quarter sales of $277.3m (€254m). Measured on a constant currency basis, the sales gain was 4.3%.

New orders jumped 11.9% – 13.4% in constant-currency terms – to $326.4m (€300m).

Milacron lost $24.6m (€22.6m) in the first quarter. In the first period of 2016, the company had made a profit of $9.8m (€9m).

Company officials are continuing to forecast organic growth from zero to 2% this year.

Goeke said he was optimistic that, when the United States has a sustained, solid recovery, Milacron will benefit with higher machinery sales. But Milacron is holding steady with its relatively cautious outlook for financial analysts.

“Until we see better signals as to where that’s trending, we’ll be holding tight,” he said.

In response to an analyst’s question, Goeke said Milacron has seen some inflation in the cost of materials used to make its products. In the case of melt delivery and aftermarket, he said that Milacron can more easily change prices. But the longer lead time to make primary machinery – injection moulding, blow moulding and extrusion – make it harder to adjust prices, he said. But the company continues to fight for lower procurement costs, he added.

“We’re repricing bids now in equipment to reflect that [inflation in materials],” Goeke said.

Goeke said some of the machinery orders Milacron gets will roll into backlog going into next year. He said the company has received some larger extrusion orders that should ship in the first quarter of 2018.


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