Offsetting solid underlying volume growth were the negative impact from foreign currency translation and lower selling prices from the pass-through of lower raw material costs and market pricing trends.
Net sales for the second quarter of 2012 were $296.2 million compared with $296.5 million for the second quarter of 2011 and $295.2 million in the first quarter of 2012.
Gross profit was $46.4 million for the second quarter of 2012 compared with $48.6 million in the second quarter of 2011 and $53.2 million in the first quarter of 2012. Unit profit was negatively impacted by a volatile raw material environment, resulting in lower sales prices relative to raw material costs, and increased lease expense associated with the new line in Virginia. This effect was somewhat offset by year-over-year efficiencies from operations in Asia and carded operations in the Americas and continued cost controls that resulted in lower SG&A costs. Profitability was also impacted by higher depreciation expense and foreign currency translation compared to the prior year period.
New investments in Suzhou, China and Waynesboro, Virginia contributed year-over-year and sequential growth in volume and sales. A new organizational structure has been implemented to match resources with existing growth opportunities as well as to identify and develop new applications of PGI technologies and capabilities.
“The results for the second quarter were in line with our prior indications and were affected by the expected headwinds from raw material cost volatility, as well as an increased competitive environment due to industry overcapacity,” says Veronica (Ronee) Hagen, CEO of PGI. “Despite these challenges, we executed well in driving volume growth in all regions. As we enter the third quarter, a moderating raw material cost environment in the Americas and the expected benefits from a new organizational structure provide the foundation for meaningful profit improvement in the second half of the year."