Gelman Quarter Sales Sag, Profits Low
Gelman quarter sales sag, profits low
By MICHAEL KERSMARKI
NEWS STAFF REPORTER
Sagging U.S. sales kept second-quarter profits to a paltry $55,000 at Gelman Sciences Inc.
The Scio Township company would have seen even more of a loss without a one-time $420,000 gain in January from the sale of poorly performing Australian assets. .
Still, Chairman Charles Gelman says growing export sales overall, cost-cutting this past year and “substantial” growth in February sales should mean encouraging news for his company’s third quarter, which ends April 30.
James J. Fahrner, Gelman’s chief financial officer, agrees.
“We think the second quarter was an abnormal event. We don’t see that U.S. sales trend continuing,” Fahrner said Friday.
Gelman, who also is chief executive officer, said in a written statement Friday that he was disappointed with the 11-percent decline in U.S. sales in the quarter that ended Jan. 31.
The domestic losses were offset somewhat by a 26-percent second-quarter increase in export sales to $3.7 million, about one fifth of the company’s overall sales.
Gelman is trying to turn itself around despite a recession, last year’s $1.5-million loss, and several protracted legal battles concerning cleanup of the soil and groundwater contamination at its Wagner Road headquarters.
The company, which makes specialty filters for the medical and industrial markets, said it has about 540 employees in the Ann Arbor area.
Its Australian sale also has been integral to making money in the first six months of the fiscal year. Gelman earnings increased 29 percent to $360,000 (15 cents per share) for the first half, which ended Jan. 31.
Without the Australian sale, the balance sheet for the first six months at Gelman (AMEX: GSC) instead would have shown a loss approaching $60,000.
Six-month sales crept up 3 percent to $36.7 million, though second-quarter sales edged down 2 percent to $17.9 million. Second-quarter earnings dropped 34 percent to $55,000, or 2 cents per share.
The $420,000 Australian gain, netting about 17 cents per share, was part of a consolidation and divestiture plan to improve the Australian subsidiary’s longterm operating performance.
When it announced the Australian sale early last month, Gelman officials that the asset sale and a separate deal to sell one of its U.S. patents eventually could be worth at least $1.15 million.
Company officials said then they would use the money to reduce long-term debt, which increased to more than $29 million at the end of fiscal year 1990 from about $23 million the year before.
There was no tax effect in the second-quarter Australian transaction because of tax losses in Australia, where sales declined $1.1 million, 32 percent below the second quarter in fiscal year 1990.