“We’re very pleased with our overall operating performance this past year, particularly in light of a sharply rising material cost environment,” said Frank C. Sullivan, president and CEO. “Our companies have been able to narrow the margin gap brought on by these higher costs through spending controls, productivity improvements and pricing initiatives...We are also benefiting from efforts to cross-market our products and services and by the introduction of innovative new products and services to the markets we serve.”
Sales for the year were $2.5 billion, a 10.8% gain over its performance in fiscal 2004. The year-over-year sales growth was the result of 8.1% organic growth, 1.4% favorable foreign currency translation, and 1.3% from acquisition activity, the company said.
RPM’s fiscal 2005 net income was $105 million compared with $141.9 million reported in fiscal 2004. Excluding the asbestos charges taken during 2005, adjusted net income was $154.5 million, an 8.9% gain over 2004.
RPM’s industrial segment sales, which accounted for 56.4% of 2005 consolidated sales, posted a 13.3% to $1.4 billion. The industrial segment EBIT rose 19.6% to $168 million, strengthening this segment’s EBIT margin by 70 basis points, to 11.7%, compared with the prior year.
Consumer segment sales, which accounted for 43.6% of consolidated sales, rose 7.7% to $1.1 billion. Organic growth contributed 6.6%. Consumer segment EBIT rose 3.1% to $147.2 million compared with $142.7 million a year ago, reflecting higher material costs.
The company’s after-tax asbestos-related payments during fiscal 2005 totaled $42.8 million compared to $33.7 million in 2004; however, last year had the benefit of the remaining third-party insurance supplement, amounting to $9.4 million on a pre-tax basis, the company said. Before taxes and before insurance, total asbestos-related payments were $67.4 million ($47 million indemnity) this year compared with $63.4 million ($55 million indemnity) last year.
“While our asbestos challenges and costs are far from over, we believe that the greater public awareness of the abuses of our legal system and, in some cases, outright fraud surrounding asbestos litigation are key factors in our outlook of a flattening cost profile and our belief that these costs will begin to decline over the long run,” said Sullivan.