Neenah Paper - Storm Clouds Gathering

Neenah Paper (NP) reported a loss for Q1 as opposed to profits last year this time. Not unexpected given the drop in demand for their product. They do seem to be approaching cost reduction effectively. But one wonders about the future and some of the explanations that the executive are using. Read this quote from Sean Erwin, Chairman and Chief Executive Officer “In addition, we continue to invest in our brands and products and work closely with customers to support our long-term competitive position.”

Then we go on to read that SG&A costs are down “....$16.3 million in the first quarter 2009 was below the prior year level of $21.2 million due to reductions in spending.”

The dots do not connect properly. It’s almost a throw away comment to say that you are investing in brands and products. But when you declare spending reductions in the same category you have to wonder are storm clouds gathering.