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Kaman Corporation,Broomfield, CT, reported sales in 2004 for the Industrial Distribution segment were a record $581.8 million, including $28.3 million from a fourth quarter 2003 acquisition, up 17% compared to $497.9 million, including $6.5 million from that acquisition, in 2003. Segment operating profits for the full year 2004 were $19.3 million, up 52% compared to $12.7 million the previous year.
Sales were $141.6 million in the 2004 fourth quarter, up 6% compared to $133.2 million in the same period last year. Operating profits were $3.0 million in 2004, compared to $3.7 million in the 2003 period.
With the stronger market, the company achieved margin improvement on the higher level of sales in the quarter. Operating profits for the quarter, however, were somewhat lower because the company's stronger than expected results triggered increased accruals for a ramp-curved incentive program that rewards a wide range of branch managers and sales personnel for their achievements. Also, while vendor incentives in the form of rebates on volume purchases were at the same approximate level for 2004 as for the previous year, they were lower in the fourth quarter. With the increase in business, rebates represented a smaller percentage of operating profits for the year than for the previous year.
"The Industrial Distribution segment had an excellent year in 2004, reflecting the combined effects of an improved industrial economic environment, a full-year of benefit from a fourth quarter 2003 acquisition, and market share gains," said Paul R. Kuhn, chairman, president and CEO. "During the year, Kaman ramped up its new national account business with Tyco International (US) Inc., Phelps Dodge, James Hardie and Quad Graphics. During the fourth quarter of 2004, Procter & Gamble, already a major customer of the company, selected Kaman as its bearing and power transmission supplier in Canada. The company opened a new branch in Toronto to serve that account while providing a platform for expansion in the area. Kaman added further to its geographic footprint with the August 2004 acquisition of Brivsa de Mexico, a small Monterrey, Mexico distributor that enhances the company's ability to attract and serve national account customers with operations in this important Mexican industrial center. In addition, Kaman was named a national distributor for IMI Norgren, Inc., providing the company an additional major line to sell through its entire U.S. branch network."
Kaman is the third largest North American industrial distributor serving the bearings, electrical/mechanical power transmission, fluid power, motion control and materials handling markets. Kaman offers more than 1.5 million items, as well as value-added services to a base of more than 50,000 customers spanning nearly every sector of industry, from its geographically broad-based footprint of nearly 200 locations in the U.S., Canada and Mexico. The company now covers 70 of the top 100 industrial markets in the U.S. This segment continues to track the U.S. Industrial Production Index and is affected to a large extent by the overall climate for its customer industries, including overall plant capacity utilization levels and the effect of pricing spikes and/or interruptions for basic commodities such as steel and oil. A weaker U.S. dollar is currently stimulating customers' export sales, and the demand from China for raw materials continues to benefit the company's locations that participate in the mining, steel and cement production markets.