CPAC Inc., stung by lower sales in its imaging chemicals and Fuller Brands businesses, expects its third-quarter profits to fall by 17 percent to 22 percent, the Leicester-based company warned Monday.
CPAC, which also said it expects its sales to be flat or slightly lower, predicted that its earnings during the final three months of last year will range between 21 cents per share and 23 cents per share, which would be down from 27 cents a year ago.
The company said most of the weakness in sales came from its color film processing chemicals business in the United States, which has been battered by intense competition and consolidation in the domestic film-processing field.
As a result, CPAC warned that sales from its imaging chemicals business would be down by about 5 percent during the quarter.
The revenue shortfall in its Fuller Brands cleaning and personal-care products business, which accounts for about 60 percent of CPAC's sales, was less severe, with revenues sliding by about 2 percent, mainly because of softness in its commercial cleaning products market, company officials said.
The company said the unusually warm weather during the last three months of 1998 led to lower sales of floor-care products, not only for CPAC but the entire commercial cleaning products industry.
Thomas N. Hendrickson, CPAC's chief executive officer, said the company still is optimistic about the growth prospects for both parts of its business.
Hendrickson said CPAC's imaging chemical sales in Asia are up 150 percent so far this year, while its new chemical plant in Thailand is expected to start shipping products in April and be in full production by September.
The company's Fuller Brands business is beginning to feel the benefits of its efforts to make its under-used plant in Great Bend, Kansas, more efficient, mainly by shifting some specialty chemical production from a former IVAX Industries Inc. plant in Marion, Ohio, to the Kansas factory. That move is expected to save about $1.5 million a year.
CPAC also said it has launched new programs for its distributors in hopes of stimulating sales and restructured its marketing programs for national accounts to focus on value-added packages that can cut labor costs.