S&P: Wellman unaffected

Standard & Poor's said Thursday that Wellman Inc.'s (B+/negative/--) announcement that its second-quarter sales and earnings improved year over year does not affect the ratings or outlook on the company.

Wellman reported record sales of $329 million, an increase of 15% from the comparable period in 2003, and EBITDA of $28 million, which was a modest increase over second quarter 2003 results, adjusted to include the impact of the February 2004 debt refinancing.

S&P said that while domestic PET resin utilization rates have improved following large industry capacity additions in 2003, Wellman continues to face pressure on operating profitability as a result of very high raw-material costs and import pressure in the domestic polyester fiber market.

Ratings are supported by the expectation that management will maintain satisfactory levels of liquidity until business conditions improve, and that continued execution on the company's cost reduction program will buffer additional margin slippage due to higher raw-material costs, the agency said.

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