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The Timken Company, Canton, OH, reported sales of $1.27 billion in the third quarter, up slightly from the same period a year ago. Strong sales in industrial markets were largely offset by significant declines in automotive markets.
"Our industrial and steel businesses performed well in the third quarter with industrial markets continuing to drive strong demand for our products," said James W. Griffith, president and CEO. "Dramatic volume reductions are posing significant challenges across the North American automotive market. We are taking actions to adapt to the decline in demand and will continue to pursue structural changes to bring our automotive business to profitability."
For the first nine months of 2006, sales were $4 billion, an increase of 3% from the same period in the prior year, driven by strong industrial markets.
Industrial Group Results
The Industrial Group had third-quarter sales of $501.8 million, up 7% from $468.2 million for the same period last year. The company continued to benefit from strong demand across its broad industrial segments, led by increases in the aerospace, industrial distribution and heavy industry segments.
Timken continues to make investments in Asia and key global industrial markets, including construction of the company's fifth manufacturing facility in China, opening of a global aerospace facility in Arizona and introduction of a new line of large-bore seals.
For the first nine months of 2006, Industrial Group sales were $1.5 billion, up 7% over the same period a year ago.
Automotive Group Results
The Automotive Group's third-quarter sales of $363.6 million were 11% below the same period a year ago. The decline in sales was the result of significant reductions in vehicle production by automakers headquartered in North America, which was partially offset by improved pricing.
The Automotive Group recorded a third-quarter loss of $26.3 million, compared to a loss of $6.0 million for the same period a year ago. In response to the recent drop in demand, Timken announced in September 2006 the reduction of 700 positions from its Automotive Group. This action is expected to result in savings of about $35 million, which will be fully realized by the middle of 2007, at a cost of about $25 million. This program is in addition to the automotive restructuring plan announced in July 2005, which has targeted savings of about $40 million by the end of 2007. The company anticipates taking additional actions to structurally improve the performance of this business going forward.
For the first nine months of 2006, Automotive Group sales of $1.2 billion were 3% below the same period last year. The group recorded a loss of $31.4 million for the first nine months of 2006, compared to a loss of $12.4 million in the first nine months of 2005.
Steel Group Results
Steel Group third-quarter sales were $442.6 million, a 3% increase from $427.9 million in the same period a year ago. The sales were driven by increased pricing, surcharges and higher demand in the service center, aerospace and energy segments, and were negatively impacted by lower automotive demand.
During the quarter, the Steel Group announced an investment in a new induction heat-treat line that will increase Timken's capacity and ability to provide differentiated products to more customers in important global energy markets. In addition, the group recently announced its intention to exit its European seamless steel tube manufacturing operation as part of its strategy to strengthen its business portfolio.
For the first nine months of 2006, Steel Group sales were $1.4 billion, a 3% increase over the first nine months of last year.
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