Libbey, one of the largest glass tableware manufacturers in the world, has reported results for the first quarter ended 31 March 2017
Net sales $173.0 million, down 5.4 percent versus prior year, or down 3.3 percent in constant currency
Net loss of $6.6 million, down $7.3 million versus prior year
Adjusted EBITDA (Table 1) $6.2 million, compared to $22.9 million in the first quarter of the prior year
Company is implementing proactive measures to respond to softer business conditions, including approximately $5 million of cost reductions and lower 2017 capital spending
Strong cost controls, pricing actions in the U.S. and Mexico, new product launches, and accelerated development of e-commerce business are supporting long-term strategy to return the business to growth
"Our first quarter results reflected net sales that were in line with our expectations, but a continuation of difficult end-market conditions in our foodservice and retail channels resulted in lower profitability than we anticipated during the quarter," said William A. Foley, chairman and chief executive officer.
"Planned furnace rebuilds, the initiation of some technology investments, foreign currency, unfavorable price and product mix, and the mark-to-market impact of certain natural gas hedges, all negatively impacted profitability in the quarter. As a result, we've begun taking proactive measures to ensure the strength of our business, and we've revised our full-year outlook accordingly."
"While we do not foresee any improvement in the competitive environment in the near-term, we are adapting to structural shifts occurring in our markets, and we're making appropriate operational and organizational improvements to maintain our business strength. We're implementing strong cost controls, taking pricing actions in both the U.S. and Mexico to improve margins, continuing to enrich our product mix with new product launches, and accelerating development of our e-commerce platform to improve sales performance.
“We're confident in the strength of our market position, and we're seeing indications of increased interest in our products in a number of regions where customers are seeking a stable supplier, as the health of some of our competitors remains uncertain. We have a great team in place working to secure a successful future, and we believe Libbey will emerge from this environment as an even stronger leader in the industry."
Net sales in the U.S. and Canada segment were lower due to softer sales in the foodservice and retail channel, which were down approximately 4 percent and 7 percent, respectively. U.S. foodservice volume was up slightly in the quarter, compared to the prior-year period. Reductions in net sales in the retail and foodservice channels were partially offset by a nearly 10 percent increase in net sales in the business-to-business channel that was driven by an increase in volume.
In Latin America, net sales declined as a result of lower net sales in the business-to-business and retail channels.
Net sales in the EMEA segment decreased primarily as a result of unfavorable currency and lower volume in the retail channel in line with our planned exit from some lower margin business.
Net sales in Other were down as a result of softer sales in China.
The Company's effective tax rate was 32.9 percent for the first quarter of 2017, compared to (23.8) percent in the year-ago period. The change in the effective tax rate was driven by a swing from Mexican peso translation losses that affected the tax provision in the first quarter of 2017, compared with translation gains for the same period in 2016, as well as changes to the mix of pretax income generated in tax jurisdictions with varying tax rates.
Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries.