Canadian tape maker says rubber shortages, prices affected results

By Liz White, ERJ staff

Montréal, Canada-Adhesive tape maker Intertape Polymer Group Inc. (IPG), headquartered in Montréal, blamed a shortage of synthetic rubber for lower sales volumes in the second quarter this year. And the firm said high costs of raw materials, including SR, had a negative impact on the group's results.

IPG achieved sales for 2005's second quarter of $190.3 million, up 10.7 percent from $171.9 million for the same period last year, and reported net earnings of $5.4 million compared to $5.7 million for the same period last year.

We were able to achieve double-digit sales growth again this quarter, despite a softening of the market for film products and an industry-wide shortage of synthetic rubber, a key raw material for certain of our tape adhesives,” commented IPG chairman and ceo Melbourne Yull.

But, he added, While we were able to satisfy some of our customers' demand with alternative products, we were not able to meet all of their demands, which resulted in lower sales volumes compared to last year."

Yull said he expects the SR shortage to be rectified by the end of 2005, but warned that it might take longer. Higher sales, he explained, were the result of price increases implemented over the past few quarters to recover increased raw material costs.”

Our net earnings, however, did not grow proportionately as they were impacted negatively by higher raw material costs, including that of synthetic rubber, costs related to an industrial accident and increased staffing as a result of the organisational realignment that we began at the end of 2004,” said Yull.

Sales price increases allowed IPG to recover raw material cost increases, as well as some gross margin, but we have not yet been able to get back to historical gross margin levels,” Yull commented.

IPG) makes specialised polyolefin plastic & paper packaging products and complementary packaging systems, and has 18 manufacturing facilities, and about 2600 employees.

The quarter's results included charges of $1.1 million for costs associated with manufacturing facility closures and an industrial accident, Yull said.