A synthetic rubber shortage hammered the
Intertape Polymer Group
Friday, sending its shares down 24%.
The packaging company, based in Montreal and Bradenton, Fla., said second-quarter earnings fell to $5.4 million, or 13 cents a share, from the year-ago $5.7 million, or 14 cents a share, even as sales rose 11% from a year earlier to $190 million.
"We were able to achieve double-digit sales growth again this quarter, despite a softening of the market for film products and an industrywide shortage of synthetic rubber, a key raw material for certain of our tape adhesives," said CEO Melbourne F. Yull. "While we were able to satisfy some of our customers' demand with alternative products, we were not able to meet all of their demands, which resulted in lower sales volumes compared to last year. This shortage in synthetic rubber is expected to be rectified by the end of 2005, but it could take longer. Higher sales were the result of price increases implemented over the past few quarters to recover increased raw material costs."
As a result, the company trimmed full-year sales guidance to a range of $755 million to $775 million, from the previous range of $775 million to $790 million. The new forecast represents annual sales growth in the range of 9% to 12%.
"The impact of the synthetic rubber shortage, which had an impact on both sales and gross margins this past quarter, is expected to continue through the summer and possibly into next year," Yull said.
The Intertape Polymer Group fell $2.70 to $8.40.