Ceramic Industry

Libbey Avoids Net Loss in Second Quarter 2009 (posted 8/3/09)

August 3, 2009

Libbey Inc. recently announced that its net sales were $195.8 million in the second quarter of 2009, compared to $224.8 million in the prior-year second quarter. Libbey reported net income of $2.7 million, or $0.18 per diluted share, for the quarter ended June 30, 2009, compared to a net loss of $2.1 million, or $0.14 per diluted share, in the prior-year second quarter.

“We continued our success in cash flow generation and inventory reduction for the quarter, resulting in improved liquidity,” said John F. Meier, chairman and CEO. “Our U.S. retail shipments again led the way during the second quarter, as sales in this channel increased almost 7% compared to the second quarter of 2008. Given overall increases in demand, primarily in North America, we have increased our scheduled capacity utilization in all three North American glass factories for the third quarter of 2009.”

For the quarter ended June 30, 2009, sales decreased 12.9% to $195.8 million from $224.8 million in the year-ago quarter. North American Glass sales decreased 11.1% to $137.7 million from $155.0 million in the year-ago quarter. The decrease in sales was attributable to a 27.9% decrease in sales to Crisa customers (15.1%, excluding the currency impact of the Mexican peso) and a 5.5% decline in sales to U.S. foodservice customers, partially offset by an approximately 7.0% increase in shipments to retail glassware customers.

North American Other sales decreased 19.2%, as shipments of Syracuse China products decreased approximately 34.0% and sales of Traex and World Tableware products decreased approximately 27.0% and 8.7%, respectively. International sales decreased 17.3% as the result of increased sales of 4.6% to customers of Libbey China, which were more than offset by lower sales at Royal Leerdam and Crisal of 17.3% and 20.5%, respectively. Excluding the negative currency impact, international sales decreased by approximately 7.9%.

The company reported income from operations of $11.5 million during the quarter, compared to income from operations of $18.7 million in the year-ago quarter. Normalized income from operations was $12.0 million during the quarter. Factors contributing to the decrease in normalized income from operations were a $5.6 million negative exchange rate impact (primarily in Mexico), lower sales and lower production activity, partially offset by lower spending on labor, raw materials, packaging, repairs, natural gas, electricity and distribution costs.

For the six months ended June 30, 2009, sales decreased 14.2% to $353.7 million from $412.1 million in the year-ago period. North American Glass sales decreased 12.7% to $246.5 million from $282.5 million in the year-ago period. The lower sales were attributable to an approximate 28.5% decrease in Crisa's sales (15.5%, excluding the currency impact of the Mexican peso) and a 5.9% decrease in sales to foodservice glassware customers in the U.S. and Canada.

With a 6.9% increase in sales during the second quarter, the U.S. retail channel delivered sales essentially equal to the all-time record retail sales performance during the first six months of 2008. North American Other sales decreased 19.4%, as sales of Syracuse China, World Tableware and Traex were all lower than the first six months of 2008. International sales decreased 18.9% as a result of significantly decreased shipments to customers of Royal Leerdam and Crisal and unfavorable currency impact on European sales. Libbey China sales increased slightly for the first half of 2009 compared to the first six months of 2008. Excluding the currency impact, international sales decreased approximately 9.4%.

The company reported a loss from operations of $0.6 million during the first six months of 2009, compared to income from operations of $28.2 million in the year-ago period. Normalized income from operations was $4.6 million for the first half of 2009. Factors contributing to the decrease in normalized income from operations were a $9.7 million negative exchange rate impact (primarily in Mexico and Europe); reduced capacity utilization, reflecting the company’s effort to control inventories and generate cash; and lower sales. These factors were partially offset by lower spending on labor, raw materials, packaging, repairs, natural gas, electricity and distribution costs.

Additional details, including a replay of a recent conference call discussing these results, is available at www.libbey.com.

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