H.B. Fuller — coming off a quarter where it dealt with global-economic slowdowns yet improved its profit margin — is realigning its businesses to respond more quickly to customers' needs.
On Dec. 1, it will move from five to three reporting segments: engineering adhesives, construction adhesives and a new business unit: hygiene, health and consumable adhesives.
"This new operating model enhances our strategic alignment across end markets, and positions H.B. Fuller to develop and deliver adhesive solutions around the world better and faster and in a more efficient manner," CEO James Owens told analysts on an earnings conference call with analysts.
As part of the reorganization, Ted Clark — former CEO of Royal Adhesives, which Fuller bought two years ago — will become chief operating officer of the St. Paul-based company.
Global-economic slowdowns and currency translations trimmed H.B. Fuller's third-quarter sales 5.8% to $725.4 million compared with the same period a year ago. Excluding the currency effects and other costs, organic revenue still decreased 3.3%.
However, Fuller was able to increase earnings to $49.7 million, or 97 cents a share, for the quarter ended Aug. 31. In the same period last year, the company made $37.7 million, or 72 cents a share.
Accounting for items such as acquisition and realignment costs, adjusted net income was 86 cents a share, shy of analysts' expectation of 90 cents a share.
The company's adjusted profit margin rose 40 basis points to 28.8% because of lower raw-material costs, sales of higher-margin products and further integration gains from the Royal Adhesives acquisition, the company's largest ever acquisition.
"We delivered solid profit performance and strong cash flow in the quarter despite challenging macroeconomic headwinds impacting global industrial production," Owens said in a statement. "Share gains in Engineering Adhesives and Asia Pacific were offset by weakness across numerous manufactured goods sectors, including automotive."
Two years into the $1.58 billion acquisition of Royal Adhesives, Fuller said it continues to reap cost synergies. Owens said the company realized $4 million in cost savings in the third quarter while also accelerating its long-term debt paydown.
Shares of H.B. Fuller closed Thursday down 1.7% to $46.70. The shares are up about 9.7% for the year. Shares have traded between $39.22 and $57.41 over the past 52 weeks.