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The Timken Company (NYSE: TKR), Canton, OH, reported sales of $1.1 billion for the first quarter of 2013, a decrease of 23 percent from the prior-year quarter. The decline reflects lower demand across most of the company's end-markets led by oil and gas, industrial distribution and off-highway market sectors, partially offset by acquisitions and improved pricing.
In addition, steel surcharges declined $72 million from the prior-year quarter.
Timken generated income in the first quarter of $75.1 million, or $0.77 per diluted share, compared with $155.7 million, or $1.58 per diluted share during the same period a year ago. Included in the results were costs related to previously announced plant closures of $0.03 per diluted share. The decrease in first-quarter earnings was driven by lower demand, mix and higher manufacturing costs, partially offset by improved pricing and lower selling and administrative expenses.
"First-quarter results were in line with our expectations, reflecting difficult comparisons from record first-quarter 2012 results," said James W. Griffith, Timken president and CEO. "We saw orders increase as the quarter unfolded, and we remain confident in our ability to drive improved profitability throughout the remainder of the year."
In the first quarter, Mobile Industries' sales of $397.1 million decreased 15 percent compared to last year's first-quarter sales of $469.1 million. The $72 million decrease included $27 million related to exited business consistent with the company's market strategy in the light-vehicle and heavy-truck market sectors. The remaining decrease was primarily driven by lower volume in most market sectors led by weaker off-highway demand in mining and construction.
EBIT for the segment was $51.2 million for the first quarter, or 12.9 percent of sales, down 41 percent from $86.7 million, or 18.5 percent of sales for the same period a year ago. The decrease was driven primarily by lower volume, higher manufacturing costs and the impact of exited business, partially offset by lower selling and administrative expense. In addition, the segment incurred $4 million of costs associated with the closure of the St. Thomas, Canada, and Sao Paulo, Brazil, bearing plants.
Process Industries' first-quarter sales were $285.2 million, down 20 percent from $355.6 million for the same period a year ago. The decrease reflects lower industrial distribution demand and lower original equipment sales, partially offset by pricing and the favorable impact of the Wazee acquisition.
Process Industries' first-quarter EBIT was $42.6 million, or 14.9 percent of sales, down 48 percent from $82.3 million, or 23.1 percent of sales for the same period a year ago. The decrease primarily reflects lower volume. Unfavorable mix and higher manufacturing costs were offset by favorable pricing and lower selling and administrative expenses.
Aerospace posted first-quarter sales of $82.5 million, down 10 percent from $91.3 million for the same period last year. The decrease reflects lower volume in the motion control sector as well as lower civil aerospace sales.
First-quarter EBIT was $8.6 million, or 10.4 percent of sales, down 20 percent from $10.7 million, or 11.7 percent of sales for the same period a year ago. The decline in EBIT reflects lower volume as well as higher manufacturing costs, partially offset by pricing and lower selling and administrative expenses.
Sales for Steel, including inter-segment sales, were $346.1 million in the first quarter, a decrease of 35 percent from $535.5 million for the same period last year. The results reflect reduced shipments to the oil and gas and industrial market sectors. Raw-material surcharges decreased approximately $72 million from the first quarter last year.
First-quarter EBIT was $35.8 million, or 10.3 percent of sales, down 59 percent from $88 million, or 16.4 percent of sales, for the same period a year ago. The decline in EBIT was primarily due to lower volume and unfavorable mix. Last year's results included a one-time expense of $5 million related to a new five-year labor agreement.