Omnova Solutions CEO: Oil prices driving costs up

Omnova Solutions Inc. (NYSE: OMN) CEO Kevin McMullen said much of the firm’s sales gains have been from new customers and aggressive marketing of decorative products. McMullen made the comments during a midday conference call.

However, he said the soaring price of oil is hurting the producer of emulsion polymers, specialty chemicals and wall coverings.

“The unrelenting climb in the price of oil continued in the quarter, driving costs for our major raw materials higher to record levels. While we have implemented price increases across many of our product lines, it has not been enough to offset all of the recent raw material inflation,” McMullen said. “These factors have masked some of the many improvements we have made in our cost structure.”

Before the opening, Omnova reported in a regulatory filing that its fourth-quarter net income of $3.7 million, or $0.09 per share, plunging 78% from net income of $17 million, or $0.41 per share, a year earlier. The results were in line with analysts surveyed by Thomson Financial, who predicted earnings of $0.09 per share.

For the three months ended Nov. 30, Omnova’s sales increased 11% to $195.9 million, from $176.4 million in the year-ago period. The firm said favorable exchange rates and improved unit volumes contributed to the sales increase. Wall Street analysts predicted $190 million in sales.

Gross profit during the three months decreased slightly to $36.3 million, from $37 million during the same period of 2006.

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