Gross profit margins affected by increased raw material costs
H.B. Fuller, a provider of adhesives, sealants, paints and other specialty chemical products, today reported Q1 revenue of 339.5 million, up 9.7 percent versus the first quarter of 2010.
Net income for the first quarter of 2011 was $14.4 million, or $0.29 per diluted share, versus $19.0 million, or $0.38 per diluted share, in last year's first quarter.
Higher average selling prices, higher volume and acquisitions positively impacted net revenue growth by 6.8, 2.2 and 1.7 percentage points, respectively, the company said. Foreign currency translation reduced net revenue growth by 1.0 percentage point. Organic revenue grew by 9.0 percent year-over-year. On a sequential basis, net revenue dropped approximately 6 percent relative to the fourth quarter of 2010, in-line with typical seasonal patterns.
Gross profit margin was down approximately 300 basis points versus the first quarter of 2010, primarily due to the cumulative effect of escalating raw material costs over the past year. Gross profit margin improved by 20 basis points versus the previous quarter as a combination of product reformulation and pricing actions offset ongoing raw material cost increases.
"We are pleased with the results of the first quarter," said Jim Owens, H. B. Fuller president and chief executive officer. "We continued our growth momentum with organic revenue up 9 percent from last year. While raw material costs continued to rise in the quarter, our gross margin improved sequentially due to a combination of pricing actions, reformulation and product substitution that were executed efficiently by the entire organization. We have bumped up our full-year revenue guidance to between 10 percent and 12 percent above last year primarily to reflect additional price increases required to recover material costs. We met our expectations for profitability in the first quarter and, as a result, we are reaffirming the full-year earnings per share guidance that we provided at the beginning of the fiscal year."