The Timken Company, Canton, OH, reported sales of $1.35 billion in the second quarter of 2007, an increase of 4% over the same period a year ago. Strong sales in industrial markets were partially offset by the divestment of the company’s automotive steering and European steel operations.
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During the quarter, the company:
- Completed the first major U.S. implementation of Project O.N.E., a program designed to improve business processes and systems;
- Made further progress on key additions to Industrial Group capacity in Asia and North America;
- Advanced its restructuring initiatives within its Automotive and Industrial Groups; and
- Completed the closure of its steel tube manufacturing operations in Desford, England.
For the first half of 2007, sales were $2.63 billion, an increase of 3% from the same period in the prior year. During the first six months of 2007, the company benefited from strong industrial market demand and record Steel Group performance, which were countered by lower demand from the company’s North American automotive customers.
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Industrial Group
The Industrial Group had second-quarter sales of $565.9 million, up 7% from $529.1 million for the same period last year. The increase resulted from favorable pricing and continued broad market-sector strength, especially from heavy industry and aerospace.
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The Industrial Group’s earnings before interest and taxes (EBIT) were $61.8 million, compared to $63.5 million in the second quarter of 2006.
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For the first half of 2007, Industrial Group sales were $1.11 billion, up 7% from the same period a year ago. First-half 2007 EBIT was $111.0 million, or 10% of sales, compared to EBIT of $109.4 million, or 10.6% of sales, in the first half of 2006.
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The company expects to see top-line growth for the Industrial Group throughout the year due to strong markets and capacity additions.
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Automotive Group
The Automotive Group’s second-quarter sales of $407.2 million were down 5% from $426.7 million for the same period last year. The decrease primarily reflects the company’s decision to exit its steering operations at the end of 2006 as part of its portfolio management strategy. Increased sales into light-truck markets during the quarter were counterbalanced by lower heavy-truck demand.
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The Automotive Group incurred a loss of $7.4 million in the second quarter of 2007 compared to a loss of $2 million for the same period a year ago.
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For the first half of 2007, Automotive Group sales of $795.1 million were down 6% from the same period a year ago. The decrease was driven by the sale of its steering operations at the end of last year and lower demand from North American heavy-truck customers. The group recorded a loss of $14.6 million for the first half of 2007, compared to a loss of $5.1 million in the first half of 2006.
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Steel Group
Steel Group sales, including inter-segment sales, were $410.8 million in the second quarter of 2007, up 7% from $383.3 million for the same period a year ago. All market sectors participated in the increase, especially energy. The Steel Group benefited from surcharges, which more than offset the impact of exiting the group’s manufacturing operations in Europe.
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Second-quarter EBIT of $61.1 million was comparable to the same period a year ago. The impact of surcharges on EBIT performance counteracted higher raw-material costs and manufacturing expenses related to construction of the company’s small-bar mill and initiatives to improve productivity.
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For the first six months of 2007, Steel Group sales were $801.1, up 6% over the first half of last year. EBIT for the first half of 2007 was $122.9 million, or 15.3% of sales, compared to EBIT of $116.7 million, or 15.4% of sales in last year’s first half.#VALUE!
