NEW YORK Timken
Co. has yet to see signs of an anticipated recovery heading
into the second half of the year, executives said.
Customers who had
overstocked in 2012 had been expected to use much of their
inventory by the second half of 2013 and then begin restocking,
leading to a stronger second half, but that has not yet
occurred, executives told investors during the companys
quarterly earnings conference call.
"By now we had
expected to see signs of a robust recovery leading into the
second half of the year," Timken president and chief executive
officer James W. Griffith said. "Instead, we see slow growth
into the second half. We now anticipate a limited recovery in
the second half but are well positioned to leverage a
Timken reported lower earnings and sales in the quarter, but
still sustained double-digit operating margins despite sluggish
"We continue to
perform very well, maintaining double-digit operating margins
despite weak demand lingering in many global markets," Griffith
said in a statement. "Although our outlook for the year now
reflects a more modest market recovery in the second half, we
continue to expect strong financial performance for the
remainder of the year."
The steel and
industrial bearings manufacturers steel segment sales
totaled $354.1 million, down 29.2 percent from $499.8 million a
year earlier, generating earnings before interest and taxes
(Ebit) of $42.3 million, down 52.4 percent from $88.9 million,
The steel segment
results reflected reduced shipments to the industrial and oil
and gas sectors, partially offset by improved sales to the
mobile on-highway sector, it added.
Timken during the
quarter completed its buy of Standard Machine, which provides
new gearboxes and gearbox service and repair, particularly
aimed at customers in the Canadian mining sector, and Smith
Services, expanding its industrial service capabilities into
power generation, paper, steel, nuclear and mining.
Steel margins in the
current quarter will be impacted by upcoming maintenance at the
companys Harrison and Faircrest steel plants in Ohio, as
well as volume decreases of at least 15 percent for the year,
partially due to tepid demand, Timken said.