Lilly Industries Inc., one of the largest North American manufacturers of industrial coatings and speciality chemical products, announced a general price increase of 5% for Industrial Coatings and Spe…
Lilly Industries Inc., one of the largest North American manufacturers of industrial coatings and speciality chemical products, announced a general price increase of 5% for Industrial Coatings and Specialty Chemicals in a company press release. This increase is due to be effective from September 15, 1999 and will affect non-contractual list pricing in North America, Asia and European markets. The company cited rising raw material costs stemming from upward pressure in crude oil, propylene and ethylene derivatives. Additionally, titanium dioxide, a major cost driver in many OEM coatings, was said to have increased in excess of 15% over the last two years. Meanwhile, in a separate company press release, it was disclosed that earnings per share for the third quarter, which ended August 31 1999, were expected to be approximately even with last year“s third quarter. Third quarter 1999 sales are estimated to increase at approximately 5% over the prior year“s same quarter. Demand for wood and powder coatings was reported to have remained strong while sales of liquid metal coatings and glass coatings continue to be affected by soft agricultural and construction equipment markets and competitive activity, respectively. Product mix and higher operating costs, due mainly to increased selling expenses for business expansion, are expected to offset the benefit of increased sales. Douglas W. Huemme, Lilly“s chairman and CEO commented, “We continue to see top-line benefits of our growth strategies implemented over the past two years. While we are pleased with continued sales momentum, expenses associated with our growth strategy will offset the revenue gains in the third quarter results. While accelerating top-line growth is critical to our commitment to build shareholder value, lower operating margins are not an acceptable long-term result. We have commenced an aggressive plan to improve profit margins by reducing operating expenses and increasing selling prices. Expense reduction measures include previously announced plant closures, further headcount reductions, supply chain management initiatives, raw material consolidation, and other actions to increase efficiency”. Huemme concluded by stating: “For fiscal 1999, we expect another record year in sales and profit. We will continue to invest for the future in strategic opportunities with high profit potential”.