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The eBearing News
October 31, 2006
Timken Reports Third Quarter 2006 Results
copyright © 2006 eBearing Inc.
The Timken Company (USA; NYSE:
TKR)
reported financial results for third quarter fiscal 2006, ended September 30, 2006.
Sales for the quarter were USD $1.27 billion, up slightly over 2005's
level of $1.26 billion.
COGS was 80.3% of sales, up from 79.6% of sales in 2005. Combined with a $400,000 increase in
reorganization expenses, gross profit dipped to $248 million, or 19.5% of sales, from
$252 million, or 20% of sales, in 2005.
Operating income jumped to $81.8 million in 2006, propelled by a $24 million drop in
impairment and restructuring charges.
Net income reached $46.5 million, from $39.8 million in 2005.
President and CEO, Jim Griffith, said: "Our industrial and steel businesses performed well in the third
quarter with industrial markets continuing to drive strong demand for our products. 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."
Timken's exposure to the North American auto industry continues to drag on sales and profitability.
In September, the company announced plans to cut Automotive employment by 700, slash production,
and continue shifting marketbuilding emphasis toward Industrial and other non-automotive sectors.
article: Timken slashing Automotive Group by 700
Industrial Group reported third quarter sales up 7% from 2005, to $501 million
from 2005's $468 million.
Results reflected, "continued strong volume and pricing," offset somewhat by higher manufacturing
costs. Higher costs also reflected the long-term positive effects of additional investments required
to boost production capacity, particularly in Asia and other high-growth markets -- China in particular.
Automotive Group recorded third quarter sales of $364 million, down 11% from 2005's $408 million.
Timken said the poor results were due to sharp declines demand from North American
automakers, partially offset by higher pricing.
As recently as second quarter, Timken still believed Automotive had life in it, commenting that
results should continue to improve as long as more favorable pricing continues to take hold.
The employment cuts in Automotive were driven by lower manufacturing levels and underutilization
of its existing manufacturing facilities. Cutting employment by 700 is expected to save as
much as $10 million by mid-2007 -- $35 million in savings at a cost of $25 million.
Automotive is already more than a year into an existing restructuring effort, begun in
July 2005, and which targets annualized savings of up to $40 million by the end of 2007.
Finally, Timken said it, "anticipates taking additional actions to structurally improve the performance
of this business going forward."
Steel Group reported third quarter sales of $443 million, up 3% from $428 million 2005
and continuing trends set in the second quarter. Steel also
is benefiting from new contract pricing and scrap cost pass-through surcharges. Steel reported higher
demand from service centers, for aerospace and energy-related bearings. Automotive demand was
down slightly.
In mid-October, Timken announced it is exiting the seamless tube business, located in
Desford, England, as part of its strategic restructuring away from commoditized steel.
article: Timken cutting steel tube
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- by Bruce A. Carr
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tips and commercial sources.
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Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
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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.
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