Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Jeffrey Zekauskas - J.P. Morgan.
[Silka Koopf] for Jeffrey Zekauskas - J.P. Morgan
A couple of questions. Was there anything unusual in the Consumer business in the fiscal fourth quarter last year? And that is the organic growth I can see much larger than I would have expected given, you know, what other companies selling through the same do-it-yourself channels and big bucks retailers have reported.
Frank C. Sullivan
No, we in the fourth quarter last year were operating at record levels. And you know we started to feel a slowdown in our Consumer businesses pretty much in June of last year and have experienced that throughout the year. We started to see some positive bumpiness if you will this spring, and that seems to be a very good trend here in the summer months in terms of slightly positive year-over-year sales growth, and obviously significantly better earnings growth, mostly based upon the expense reduction actions we took last year.
[Silka Koopf] for Jeffrey Zekauskas - J.P. Morgan
In terms of raw material costs, it seems that raw materials move slower in the Industrial space and they’re a little bit higher on the Consumer side. Are those on the Consumer side packaging or tinplate related costs or, you know, which things are higher? Which things are lower? And what you expect that overall raw material costs should trend for the company as a whole, should trend lower or should trend higher going forward?
Frank C. Sullivan
Raw material costs as a whole are below their peak prices of last summer when we were dealing with $140 oil and its implications on chemical raw materials, and have come back to about where they were 15 months ago, which is certainly some relief but obviously at historically high levels over the last five years. We did experience some packaging issues including tinplate which you’re aware of. But the trend in the early part of 2010 is for a slight improvement, both in our Industrial businesses and our Consumer businesses as it relates to raw material costs.
[Silka Koopf] for Jeffrey Zekauskas - J.P. Morgan
And then should we also see the gross margin improve in the coming quarters? Or is it too difficult given the overall volume decline that one may see on the Industrial side?
Frank C. Sullivan
Yes, it’s hard to say. I would expect to see gross margin improvement in our Consumer businesses as a result of improvement in some raw material costs as well as a return to sales growth. I would expect our prime margin Industrial businesses to trend more positively, but as for the gross margin it really depends on absorption issues relative to our conversion costs and where revenues come out.
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