AirBoss sees 57 percent rise in net income; strong performance in rubber compounding unit

Newmarket, Ontario --- Rubber products manufacturer AirBoss of America Corp. posted a 57 percent boost in net income and a slight rise in sales for the first half of the year on the back of a strong performance of its rubber compounding division.

The Canadian firm reported a net income for the six months of $4.9 million, compared to $3.1 million in the first half of last year, and sales of $122 million, compared to $120.8 million.

The rubber compounding division's sales for the half rose by 18 percent to $93.5 million, while income before tax surged to $5.1 million from $1.6 million in the first half of last year.

''While sales were affected by the higher Canadian dollar and timing of military protective wear orders, profitability was favourably impacted by production efficiencies in the rubber compounding division,'' the company said in a statement.

''The increased volume came mainly from existing customers who are manufacturers of off-road tyres, belting and other products servicing the industrial and mining sectors.''

Compounds produced for the automotive part sectors accounted for 27 percent of the volume increase, AirBoss said.

Half-year sales in the railway products division fell by 22 percent to $11 million and by 24 percent to $25.4 million in the military and industrial products segment.

Rising commodity prices and a softening of demand, however, have led to a more pessimistic outlook.

''Significant increases in the cost of carbon black and natural rubber will occur in the third quarter,'' the statement said.

''These two factors combined will make it difficult for the rubber compounding division to both increase sales and pass along all of the raw material cost increases immediately.

''Rubber compound manufacturing capacity has also been affected in North America by a downturn in sales of domestically produced pneumatic tyres.

''Most of the major tyre producers have reduced the purchase of outside compounds and this has created some temporary excess capacity in North America.

''Greater uncertainty relating to demand and commodity prices are cause for a more conservative earnings outlook in the second half of the year.''