Royal Group reports net loss of $32 million for Q2 2006

Woodbridge, Ont.-based polymer processor and extruder Royal Group Technologies Limited (RGT) reported a net loss of $32.5 million during the second quarter of 2006, compared to net earnings of $18.6 million for second quarter 2005.
Net sales during second quarter 2006 were $458.4 million, which represented a decline of $28.3 million, or 6 per cent, from the company’s net sales of $486.7 million in the same period during the prior year.
RGT attributed this decline to the fact that, with approximately 60 per cent of its sales having been made to customers in the U.S., its sales total was directly affected by the narrowing rate of exchange between the U.S. and Canadian dollars.
Despite this, the company reported that its gross profit margin increased slightly to 26.5 per cent in Q2 2006, from 26.3 per cent in Q2 2005, an improvement which the company attributed to initiatives to trim lower margin products and accounts from its sales mix.
RGT also reported operating expenses of $103.4 million for Q2 2006, up $15.7 million from $87.7 million in Q2 2005.
The company’s Q2 2006 financial results showed “normalized earnings [that] were within the range we expected, reflecting initial progress with implementation of our management improvement plan,” Lawrence J. Blanford, RGT’s president and CEO, said.
On August 4, RGT announced that it had reached an agreement with Atlanta, Ga.-based chlorovinyl and aromatics manufacturer Georgia Gulf Corporation to acquire all of RGT’s common shares at a price of Cdn.$13.00 per share. Closing of the transaction is targeted for September 2006. “[Our] second quarter earnings were sufficient to meet any test built into the arrangement agreement with Georgia Gulf,” Blanford said.