Power shortage vexes Libbey

5/11/2001

Toledo's Libbey, Inc., is considering producing its own power for its California glassware factory which had to lease backup generators after temporary blackouts brought machinery to a halt a dozen times in January.

The tableware company hopes a continued downward trend in prices for natural gas, used in glass furnaces and elsewhere, and its energy planning will help bring that expense close to the budgeted amount. Still, high gasoline prices could stifle travel - and demand for glasses used in hotels and restaurants.

All in all, energy is a “wild card” for Libbey this year, John Meier, Libbey's chairman and chief executive, said yesterday

“We truly are entering in a period of uncertainty, and energy in various forms is at the center,” Mr. Meier told investors and employees during the company's annual shareholders' meeting at the Sylvania Country Club.

Even with high energy prices and a slowing economy, Libbey this year expects to increase sales to $450 million to $460 million, profits to $48 million to $50 million, and earnings to $3.10 to $3.20 a share. Last year, Libbey had sales of $449 million, profit of $47 million, and earnings of $3.01 a share.

This year, one analyst said, Libbey is facing a myriad of factors beyond its control: tight demand, lowered sales of candles contained in glassware, higher energy expenses, and electric interruptions at one of its three glass plants that prevent it from running efficiently.

“It's really hard to perform well in this kind of an environment,” analyst Arnold Ursaner, managing director of CJS Securities, said from his office in White Plains, N.Y.

Yet Libbey did a commendable job last year despite such situations and can manage some of its expenses, he said.

Libbey is trying to trim its inventory by at least 10 percent this year and is curbing costs in other ways, including tightening budgets and travel, Mr. Meier said.

Less than 50 temporary layoffs at its 1,200-employee Toledo glass factory can be attributed to the slowing economy and inventory reduction, Mr. Meier said. Libbey, meanwhile, has installed one new glassware line and will add another at the Ash Street factory as part of plans to add 25 to 50 Toledo jobs and invest $25 million to $41 million in local operations, he said.

Libbey is enjoying success on Wall Street as its stock price last week hit its highest point in two years at $33.65 a share and investors are turn from technology stocks. The company's stock price closed at 4 p.m. yesterday at $33.01 a share on the New York Stock Exchange, up 36 cents.

“Value stocks are getting increased attention, and those that deliver will be rewarded,” Mr. Meier told shareholders.