Libbey Inc. reported a net sales decrease in its first quarter, impacted by what the company termed difficult market conditions in the retail and food service channels.
The company reported that net sales were $173 million, down 5.4% versus the prior year. It also reported a net loss of $6.6 million, down $7.3 million versus the prior year. Libbey’s adjusted EBITDA was $6.2 million, compared to $22.9 million in the first quarter of the prior year.
Libbey stated that it is implementing proactive measures to respond to softer business conditions, including approximately $5 million of cost reductions and lower 2017 capital spending.
“Our first quarter results reflected net sales that were in line with our expectations, but a continuation of difficult end-market conditions in our food service and retail channels resulted in lower profitability than we anticipated during the quarter,” said William Foley, chairman and CEO, Libbey. “Planned furnace rebuilds, the initiation of some technology investments, foreign currency, unfavorable price and product mix, and the mark-to-market impact of certain natural gas hedges, all negatively impacted profitability in the quarter. As a result, we’ve begun taking proactive measures to ensure the strength of our business, and we’ve revised our full-year outlook accordingly.”
With regard to the U.S. and Canada segment, Libbey reported that its net sales were lower due to softer sales in the food service and retail channel, which were down 4% and 7%, respectively. U.S. food service volume was up slightly in the quarter, compared to the prior-year period. Reductions in net sales in the retail and food service channels were partially offset by a nearly 10% increase in net sales in the business-to-business channel that was driven by an increase in volume. In Latin America, Libbey’s net sales also declined as a result of lower net sales in the business-to-business and retail channels.
“While we do not foresee any improvement in the competitive environment in the near-term, we are adapting to structural shifts occurring in our markets, and we’re making appropriate operational and organizational improvements to maintain our business strength. We’re implementing strong cost controls, taking pricing actions in both the U.S. and Mexico to improve margins, continuing to enrich our product mix with new product launches, and accelerating development of our e-commerce platform to improve sales performance,” said Foley.
He added, “We’re confident in the strength of our market position, and we’re seeing indications of increased interest in our products in a number of regions. We have a great team in place working to secure a successful future, and we believe Libbey will emerge from this environment as an even stronger leader in the industry.”