Libbey posts smaller 3rd profit

Company cites weak global demand; reaches deal with labor

10/30/2013

Libbey Inc. said Tuesday it has reached agreements with its four labor unions in Toledo, and said internal organizational restructuring across the company over the last two years has the table glass and stemware maker well-positioned for the long haul.

But for now, Libbey is largely at the mercy of weak global demand for its products across most business sectors, company executives said.

The downtown Toledo company had cautioned investors that its third-quarter results would be worse than anticipated. On Tuesday, the company said it posted a $4.7 million profit in the quarter, down 64 percent from $14.9 million last year. On a per share basis, the company earned 21 cents per share this year, versus 70 cents a share last year, a 70 percent drop.

Sales also were down 2 percent to $204 million from $209 million last year’s quarter.

The company's stock, which is traded on the American Stock Exchange, closed at $21.84, down 8 cents.

Sales in the Mexico and Latin America markets were bright spots, but most other regions, including the United States and China, were down, Libbey said.

“We need to see more traffic at retail and in food service, whether it’s hotels, restaurants, casinos,” Chief Executive Stephanie Streeter said on a conference call with Wall Street analysts.

But Libbey officials don’t expect that much of a boost at least for the rest of year.

“In this environment, we know we have to be more innovative and aggressive in our sales and marketing efforts,” Ms. Streeter said. “We are therefore stepping up our new products efforts and the sales and marketing programs in our advantaged businesses.”

Libbey officials also provided an update on the company’s work to realign its production in North America, an effort that is expected to save between $7 million and $9 million annually starting next year. Ms. Streeter said the realignment, which shifts certain types of production from Shreveport, La., to the company’s plants in Toledo and Monterey, Mexico, should be completed by the end of January.

“Plus we are ramping up on a corporate-wide drive to further increase productivity,” she said. “We expect the new initiative combined with the significant progress we've made in our 2011 through 2013 restructuring [will enable] Libbey to deliver industry-leading cash flow and returns on invested capital, especially if we have an improved sales environment.”

The specifics of the new labor contracts in Toledo were not released.

The previous contracts with the four unions expired Sept. 30. Libbey said the new three-year contracts all run through Sept. 30, 2016. Ms. Streeter said during the call that the company is “encouraged by the increasingly positive working environment” in the Toledo facility.

Answering a question by an analyst, she said there were no substantial changes to report.

“We were able to get some increased flexibility that we’re grateful for, and the increases in wages were right around inflation. Nothing that would be unexpected,” she said.