Furon Reports Profit but Its Stock Price Drops

Furon Co., after cutting costs and selling two manufacturing plants, said Wednesday that it posted a profit of $7.3 million for its latest fiscal year.

The company, which makes rubber and plastic parts for manufacturers, said that its earnings, equal to 84 cents a share, contrasted with a loss of $22.3 million, or $2.65 a share, for the previous 12 months. Revenue for the year ended Jan. 30 fell 2% to $300.1 million from $306.2 million.

But any celebration of a rebound was short-lived. The company’s stock price fell $2.375 a share to close at $15.625 in NASDAQ trading after Chairman and Chief Executive Michael Hagan told analysts that the company’s profit for the current quarter “may have difficulty” matching income for the same period last year.

“We beat our brains out throughout the year and have improved our earnings, and it’s like no one cares,” company spokesman Ron Bissell said. “It shows you cannot rest on your laurels.”

Hagan, however, also told the analysts in a teleconference that the healthy profit of 26 cents a share for last year’s first quarter was because of an unusually high number of orders from the petrochemicals industry.

“Over the past few years we have experienced some seasonality in our major markets, but this year we expect steady, moderate growth,” he said in a statement.

Furon, based in Laguna Niguel, has cut the size of its work force by almost 20% to about 2,300 and is devoting the equivalent of a fifth of its sales to new or improved product lines, Bissell said. For example, it recently introduced new cable tubing products for the pollution-control industry.

“The strategy is to take the technology a little further,” he said. “To be satisfied with what you (introduced) five years ago, you won’t be a player. You will be gone.”

The company sold two unprofitable divisions--one in Santa Ana and another in Houston--about a year ago. It also is nearing agreement on selling three rubber molding plants, Bissell said, and another one is for sale.

“We’re focusing on higher-margin products that are more advanced technologically,” he said.

Furon Posts Profit

Despite lower sales, Furon Co. made a big leap out of the red in its latest fiscal year, which ended Jan. 30. The company, based in Laguna Niguel, earned $7.3 million on sales of $300.1 million for fiscal 1993. That contrasted with a loss of $22.3 million on sales of $306.2 million for the previous 12 months. In thousands of dollars, except data per share:

4th qtr 4th qtr 12 months 12 months 1992 1993 1992 1993 Revenue $72,944 $70,566 $306,170 $300,107 Net income (loss) (25,316) 1,319 (22,342) 7,257 Per share (loss) (3.00) 0.15 (2.65) 0.84

Source: Furon Co.