CHICAGO Timken Co.s net income plunged year on year in the first quarter, but the company managed to sustain double-digit operating margins despite low levels of capacity utilization, the companys top executive said.
"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," president and chief executive officer James W. Griffith said in a statement April 24.
The Canton, Ohio-based steel and industrial bearings manufacturer reported net income of $75.1 million for the three months ended March 31, down 51.8 percent from $155.7 million in the same year-ago period, on revenue that dropped 23.3 percent to nearly $1.09 billion from $1.42 billion.
The decline reflects lower demand across most of the companys end markets, led by oil and gas, industrial distribution and off-highway market sectors, as well as higher manufacturing costs. This was partially offset by acquisitions, improved pricing and lower selling and administrative expenses.
The steel business recorded quarterly sales of $346.1 million, down 35.4 percent from first-quarter 2012 sales of $535.5 million. Steels earnings before interest and taxes (Ebit) fell 59.3 percent year on year to $35.8 million from $88 million. Raw material surcharges declined $72 million from the year-ago quarter.
Timken completed three capital projects totaling $85 million during the quarter, increasing capacity and manufacturing effectiveness in the steel business (amm.com, April 11). The company also acquired Smith Services Inc., which rewinds and repairs electric motors, and Interlube Systems Ltd., a U.K.-based provider of automated lubrication delivery systems and services. It also signed an agreement with Greenbrier Cos. Inc. to purchase assets, thus expanding its Mobile Industries segments rail bearing reconditioning activities, Timken said.