A slowing economy catches up with Protolabs

2022-11-30 12:43:48 By : Ms. Amy Ma

Get access to essential strategic content, in-depth reports, industry intelligence, and exclusive data.

Get access to essential strategic content, in-depth reports, industry intelligence, and exclusive data. 2k Injection Molding

A slowing economy catches up with Protolabs

Get access to essential strategic content, in-depth reports, industry intelligence, and exclusive data.

Get access to essential strategic content, in-depth reports, industry intelligence, and exclusive data.

Proto Labs Inc., the all-digital ordering, processing and purely ecommerce manufacturer in Minneapolis, reported slowing sales in the third quarter.

The primary reason: slowing customer demand for injection molding, one of the company’s biggest sales business channels.

Protolabs closes its Japan arm after a weaker Q2

“Revenue came in near the bottom end of our guidance as strong growth in several areas of our business is being largely overshadowed by a decline in our injection molding revenue, predominantly due to the challenging macroeconomic climate,” CEO Rob Bodor told analysts on a Q3 earnings call based on a transcript from Fool.com.

In the third quarter, revenue for injection molding declined 15.3% to $48.9 million from $57.7 million. In comparison, sales for CNC machining grew slightly to $47.5 million. That’s up 8.7% from $43.7 million in Q3 2011. Sales for Protolabs’ sheet metal business increased $5.2 million for the current third quarter. That’s up 6.1% compared with $4.9 million in the prior year.

“We saw fewer production parts orders in the most recent quarter due to excess inventory buildup in the market at a time when many of our customers are experiencing softening demand and elevated inflation,” Bodor said. “These macroeconomic and inflationary headwinds impact injection molding parts orders more than our other manufacturing services because injection molding has the highest relative proportion of low-volume production compared to prototyping and the highest average number of parts per order.”

Despite the sales slowdown, Protolabs continues to ramp up its digital commerce features and functions.

In January 2021, Protolabs agreed to pay $280 million (plus up to $50 million contingent on performance) for Amsterdam-based Hubs. Hubs offers digital manufacturing services through an international network of hundreds of manufacturers and also processes orders online. In the first quarter of 2022, Protolabs “made progress on the integration of the Protolabs and Hubs offers into one ecommerce platform with a focus to provide a best-in-class customer experience,” Bodor said.

Now, Protolabs is beginning to roll out more integrated digital order and payments features across various global regions.

“We now offer CNC manufacturing for eligible parts through the combination of our internal digital manufacturing and our digital network of manufacturing partners,” he told analysts. “We began the rollout in Europe, and we’ll continue to test and iterate. In the coming months, we will offer customers more expanded capabilities through the digital network, and we plan to expand the integrated offer to the Americas in early 2023. And finally, Proto Labs U.S.”

Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week. It covers technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, vice president of B2B and Market Research Development, at [email protected]  and follow him on Twitter @markbrohan.

Follow us on LinkedIn and be the first to know when new Digital Commerce 360 B2B News content is published.   

Protolabs closes its Japan arm after a weaker Q2

Manufacturer Protolabs builds out its digital services

Digital pioneer Protolabs takes its ecommerce strategy to the next level

How Xometry uses data to match buyers with on-demand manufacturers

Copyright © 2022 Digital Commerce 360 | Vertical Web Media LLC

A slowing economy catches up with Protolabs

Molding For Metal Copyright © 2022 Digital Commerce 360 | Vertical Web Media LLC