|
|
|
|
|
The eBearing News
August 23, 2004
NN Reports Second Quarter 2004 Results
copyright © 2004 eBearing Inc.
NN Inc. (USA) reported second quarter 2004 results, comparisons that now include its mid-2003
acquisitions of NN Veenendaal from SKF and controlling ownership of NN Euroball, along with the
disposal of NN Arte.
• NN acquiring SKF Veenendaal operation
• NN 3rd quarter 2003: Veenendaal and Euroball acquisitions, Arte shutdown
NN is a key bellwether for the bearing industry, a global manufacturer and supplier of precision bearing components
including balls, rollers, seals and retainers.
Sales for second quarter were USD $75.3 million, up 17% from $64.2 million in 2003.
CFO David Dyckman said, "Revenue growth of $11.1 million, or 17.3%, over the second quarter 2003 was principally
attributable to a full quarter contribution from the Veenendaal operation of $6.2 million in revenue, $2.8
million of which was due to increased demand and new program initiatives, and approximately $2.1 million
related to the impact of currency exchange rates."
Net income for second quarter 2004 was $2.0 million, from $700,000 in 2003.
Mr. Dyckman went on to say, "Our earnings were favorably impacted by the accretion of the Veenendaal
acquisition, our purchase of SKF Group's remaining 23% ownership in Euroball and volume and cost
improvements in our second quarter and year-to-date 2004. Offsetting these contributions were inventory
reductions, material price inflation, Sarbanes-Oxley Section 404 ("SOX 404") compliance costs, and start-up
costs associated with Slovakia and China."
Cost of Goods Sold (COGS) rose to 78.3% of sales in second quarter, from 77.5% in 2003. NN said the rise
was due to the effects of consolidating Veenendaal, inventory reductions, and raw material price
increases. Partially offsetting those negative effects, higher volumes improved operating efficiencies and
leverage, while direct cost reduction programs continued to gain traction.
Throughout its results, NN refers to its company-wide Level 3 Program. Level 3 at NN integrates the
key principles of Lean Enterprise, Six Sigma, and Total Productive Maintenance.
In early July, NN had warned it was reducing inventory faster than originally planned, principally
due to the Level 3 Program. "Although this is a positive development from a cash flow perspective
and is fundamental to streamlining operations," NN said, "it is anticipated to negatively
impact second quarter and full year margins."
NN said it plans to continue reducing inventory as part of its Level 3 Program.
The long-term goal is improved asset utilization
and return on invested capital. Related to that effort, NN said it expects to cut total debt by
$13 million or more by the end of 2004.
Chairman and CEO, Rock Baty, said, "We anticipate that approximately 80% of the increased costs we have
experienced in 2004 will not recur in 2005. Two notable exceptions are the potential continuing steel
inflation and SOX 404 compliance costs. We believe the compliance costs associated with SOX 404,
while lower than 2004, will again be a major cost factor in the upcoming year. With respect to raw
materials, the current environment from both a supply and price perspective continues to be volatile
and difficult to forecast. The most recent information indicates that prices will continue to rise for
both scrap and finished steel through the foreseeable future."
Mr. Baty went on to comment about 2004 and 2005 in general: "Looking forward to the second
half of the year, we are continuing to see good demand from our customers with the exception of anticipated
downturns in North American light vehicle demand and production; we expect the strength of this demand
to continue in the second half of the year. Additionally, we made excellent progress during the quarter
on the Slovakian and Chinese facility startups, as well as our company-wide Level 3 Program. We have begun
limited production in Slovakia in the second quarter of this year and anticipate reaching our forecasted
levels of production in the fourth quarter of 2004. With respect to China, we remain on schedule to begin
production in mid-2005. We have made excellent progress in our Level 3 Program with achievements in
training and improvement initiatives in both our North American and European facilities. We believe
the program will deliver exciting opportunities in earnings, cash flow and quality improvements."
|
|
|
printer-friendly version
|
|
- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
|
|
eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
|
|
|
|
|
| |
eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
|
|
|
