Fairlawn, OH, Sept. 25--Omnova Solutions Inc. swung to a loss for the third quarter, beset by flat sales, higher raw-material costs and restructuring expenses.
In a press release Wednesday, the chemicals and surface materials company said it posted a loss of $10.6 million, or 27 cents a share, for the quarter ended Aug. 31. A year ago, earnings were $500,000, or 1 cent a share.
This year's results include a $6.2 million restructuring and severance charge stemming from Omnova's exit from the heat transfer products business.
Excluding the charges, the latest third quarter loss was $4.4 million, or 11 cents a share.
Sales decreased slightly to $176.8 million from $177.6 million.
Omnova said raw material costs increased by $7.3 million from a year ago, due to significant inflation in oil- and natural gas-based feedstocks.
Interest expense jumped to $5.3 million from $1.7 million a year ago, mostly because of higher borrowing rates on recently issued long-term bonds, as well as higher average debt levels.
The exit from the heat-transfer products business will likely result in another $1.3 million in charges for the fourth quarter. Cash costs related to the total restructuring and severance program are expected to be $1.8 million, the company said.
Omnova expects to save about $3 million annually after exiting the business.
