H.B. Fuller’s Asia Pacific segment
H.B. Fuller’s (FUL) Asia Pacific segment reported revenues of $57.5 million in 3Q16. This represents 11.2% of the company’s total revenue. On a year-over-year basis, the revenue from this segment has risen 5.2%, helped by revenue from the acquisition of Advanced Adhesives. Below are some of the reasons for this rise in revenue:
- Lower average prices negatively impacted the segment’s revenue 1.0%.
- Sales volumes had a positive impact of 10.6% on the segment’s revenue. Volume growth was witnessed across all markets within the segment.
- The foreign exchange translation negatively impacted the segment 4.4%, mainly due to a strong dollar against Asian currencies.
It’s worth noting that from 1Q15 to 4Q15, revenues for the segment are as reported and don’t reflect adjustments due to a new reporting segment.
The above graph reflects a fall in the segment’s revenues since 1Q16. This is mainly due to the transition of part of the segment’s revenues to the new Engineering Adhesives segment.
Asia Pacific segment: Adjusted EBITDA and EBITDA margin
The Asia Pacific segment reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $5.2 million in 3Q16 compared to $4.6 million in 3Q15. This implies a rise in adjusted EBITDA of 13% on a year-over-year basis. The segment’s adjusted EBITDA margin for 3Q16 was 9.0% compared to 8.4% in 3Q15. This implies a rise of 60 bps (basis points) in adjusted EBITDA margins on a year-over-year basis.
The margins improved basically due to the synergy realization from the alignment of the acquisition of Advanced Adhesives. They were partially offset by the incremental cost in the ramp-up of the new manufacturing facility in Indonesia.
As of September 22, 2016, the iShares S&P Small-Cap 600 Value ETF (IJS) had 0.75% of its total holdings in H.B. Fuller. A few holdings of this ETF include Chemours (CC), Wolverine World Wide (WWW), and Northwest Bancshares (NWBI), with weights of 0.86%, 0.74%, and 0.50%, respectively.
In the next part, we’ll take a look at the 3Q16 performance of H.B. Fuller’s Construction Products segment.