FAIRLAWN, OH -- OMNOVA Solutions Inc. has reported net income of $5.1 million, or $0.12 per diluted share, for the second quarter ended May 31, 2009, compared to a net loss of $3.1 million, or $0.07 per diluted share, for the second quarter of 2008. Included in the second quarter of 2009 were restructuring and severance charges of $0.8 million and a net pension plan curtailment gain of $0.7 million resulting from the suspension of the accrual of future service benefits for all salary and non-union hourly employees and certain union hourly employees.
Net sales decreased $58.4 million, or 26.6 percent, to $161.3 million for the second quarter of 2009 compared to $219.7 million for the second quarter of 2008. The second-quarter decrease was the result of lower selling prices and weak market demand, which were partially offset by market share gains and penetration into new adjacent markets. Gross profit improved to $40.0 million, with margins of 24.8 percent, in the second quarter of 2009 compared to $33.8 million, and margins of 15.4 percent, in the second quarter of 2008. The margin improvement was due primarily to lower raw material and manufacturing costs.
"Our improved second-quarter performance reflects the impact from a number of positive actions by the company, including broad-based cost reductions, structurally improved pricing and the introduction of innovative new products, as well as lower raw material costs," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer.
Performance Chemicals net sales during the second quarter of 2009 decreased 30.5 percent, to $87.0 million, compared to $125.2 million in the second quarter of 2008. The decrease was driven primarily by weaker market conditions, which led to volume decreases of $20.8 million, or 16.6 percent, lower selling prices of $15.6 million and unfavorable currency translation effects of $1.8 million. Segment operating profit was $11.4 million for the second quarter of 2009, up from $1.9 million for the second quarter of 2008.
While volumes were weaker on a year-over-year basis, the daily sales run rate in the second quarter of 2009 was better than the prior quarter. Additionally, the company's technology won new business in several markets.
Decorative Products net sales were $74.3 million during the second quarter of 2009, a decrease of $20.2 million, or 21.4 percent, compared to the second quarter of 2008. Sales were lower due to volume decreases of $16.7 million and an unfavorable currency translation effect of $4.2 million, which were offset by price increases of $0.7 million. Segment operating profit for the second quarter of 2009 was $0.2 million, compared to $1.1 million for the second quarter of 2008, but is a sequential improvement over the first quarter 2009 loss of $2.9 million. The improvement in the second quarter of 2009 versus the first quarter of 2009 was due to significant cost reduction actions and lower raw material costs. This quarter's operating profit includes restructuring and severance charges of $0.8 million.
Included in Decorative Products' results for the quarter are sales of $23.4 million from its Asian businesses, compared to $24.0 million in the second quarter of 2008. The Asian businesses generated operating profit of $1.9 million during the second quarter of 2009 as compared to a loss of $0.9 million for last year's second quarter. This improvement was driven by lower raw material costs, significant cost reduction actions and improved productivity.
