Financial Flash

Quanex Building Products’ European Sector is Top Performer

During a recent earnings call, officials from Quanex Building Products reported mostly increases across the board. Chief finance officer and senior vice president of finance Brent Korb said an increase in net sales was largely due to strong revenue growth in the company’s European fenestration division. The North American fenestration sector saw less extensive growth but remained positive.

The company’s European fenestration segment saw revenue growth of 15% year-over-year, while the North American segment saw a 1% increase.

“I think the reason that this business outperforms the general economy is when a window fails, you have to replace it,” adds president and CEO Bill Griffiths. “And because the infrastructure is so old and the replacement cycle continues there it’s a little bit insulated from the general economy.”

Griffiths says the softer sales in the North American market were due mainly to inclement weather during the quarter and customer inventory destocking, but he is hopeful for a strong second half. As the weather improves, he says Quanex officials and customers are confident new construction and R&R figures will also improve.

However, the company did witness a significant net loss of $24 million during the second quarter of 2019 due to shifts in the cabinet industry.

“The [net sales] increase was mainly due to strong revenue growth in our European Fenestration segment, which was driven by above market growth and price increases related to raw material inflation recovery,” says Korb.

He said about half the growth was credited to those price actions the company took in the spacer and vinyl profile businesses in late 2018, particularly at HL Plastics—which Quanex acquired in 2015.

Despite the headwind, Quanex officials say they still expect to meet their adjusted EBITDA of $97 million to $107 million and consolidated revenue growth of between 2-3% in 2019.

Gimav Members Report Increase in Sales

Gimav—the association that represents Italian manufacturers of glass processing machinery, systems, special products and accessories—reported its members saw a 3.75% increase in sales in fiscal year 2018 compared to the previous fiscal year, according to data analyzed by the organization’s Study Center.

The European continent was the most significant market for flat glass produced in Italy, with a more than 50% share of the total. There was a decrease in exports to non-EU markets. Geographically, the U.S. stands out as the top customer, with a 16% share, followed by Poland, Germany, Brazil and France.

Sales in the domestic market grew thanks to the incentives provided for by the organization’s Industry 4.0 Plan, a program of government incentives for machinery upgrades.

“…It becomes even more clear just how strategically important a well-structured and long-standing Industry 4.0 Plan can be for Italian businesses. Process innovation requires lots of time and certainty if businesses are to plan for sustainable, effective investments. It is crucial that a strong message be sent regarding Industry 4.0 Plan’s long-term continuity that takes into account not only tangible and intangible goods, but also the ongoing training of human resources,” says Gimav president Michele Gutsi.

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