Libbey Expects Sales, EBITDA to Fall in Q3
TOLEDO, Ohio-Libbey said it is projecting third-quarter revenue to total about $204 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be between $27 million and $29 million. These figures represent a drop of $5 million in revenue and from $9 million to $11 million in EBITDA.
A preliminary statement on the quarter, which ended on Sept. 30, said the reduced revenue was a result of declines in its retail channel of distribution in Canada, China and the United States, and, to a lesser degree, in the food-service channel in each of these markets. Libbey attributed the softness in these markets to weak consumer spending and a drop in overall demand in these regions. The revenue shortfalls were partly offset by stronger sales in the U.S. business-to-business channel.
The decline in EBITDA was due to costs related to a capacity realignment in the company's North American facilities, less-than-expected use of capacity in the U.S. facilities and the impact of a planned furnace rebuild in its China facility. The impact of a furnace malfunction in one of its facilities, which occurred last month, also played into these results, Libbey said.
In spite of these costs and macroeconomic factors, Stephanie Streeter, Libbey's CEO, said the company continues to progress on its Libbey 2015 plan, its strategy to increase its efficiencies; improve its financial structure; capitalize on its leadership in certain markets, such as food service in the United States and Mexico and retail in Mexico; and accelerate its growth in China, among other initiatives. "We are well positioned in (China and the United States) for long-term growth as the economic environment improves, and we continue to see strong results in our other high-growth markets," Streeter said.
However, the fourth quarter is expected to bring continued weakness in retail demand in the United States, Canada and China, partly offset by growth in Mexico and Latin America, modest growth in the U.S. business-to-business channel and growth in Europe, the Middle East and Africa. Sales for all of 2013 are now projected to be slightly less than sales in 2012, while adjusted EBITDA margins should be similar to last year.