原文">Cardoso: Kennametal to close four more facilities
As part of an ongoing effort to restructure the company and shrink its manufacturing footprint, Kennametal Inc. said it plans to close four more facilities, said Chairman, President and CEO Carlos Cardoso during a conference call with analysts to discuss the company's second quarter results.
Net income for the tooling manufacturer showed a profit for the second quarter which was 61 percent lower than the year-ago quarter.
Kennametal (NYSE: KMT), based east of Pittsburgh in Latrobe, reported earnings of $6 million for the quarter ended Dec. 31, or 7 cents a share, compared with earnings of $15.7 million, or 22 cents a share, in the same quarter a year ago. Sales for the second quarter were also down, to $442.9 million, compared with $546.1 in the year-ago quarter.
The company still beat Wall Street's estimates, of earnings-per-share of 5 cents, according to a survey of 13 analysts by Zacks Investment Research.
Cardoso said in the earnings release that the improvement in second-quarter results demonstrated that Kennametal's "restructuring initiatives" were meeting with success.
In Thursday morning’s earnings release the company said further restructuring actions will be taken in the six to nine months. The company estimates that once these moves are implemented, the company will save $30 million to $35 million annually, though executives do expect to incur pre-tax charges in connections with these changes.
Kennametal would not disclose which facilities would be shuttered. Joy Chandler, vice president of corporate relations, said two of the closures would be in Europe. The capacity from those two closures would be transferred to other European facilities, she said.
Since the restructuring plan was announced in April 2008 the company has closed nine facilities and divested seven others, Cardoso said. He called the moves "tough but necessary decisions to resize and reposition Kennametal."
With the added four closures plus the divestitures the company will have lost 20 manufacturing facilities, Cardoso said. Salary levels and headcount have been reduced 20 percent globally, said Frank Simpkins, vice president and chief financial officer.
In the first quarter of 2010 the company reported a loss of $9.8 million, or 12 cents a share, that compared to profits of $35.5 million, or 47 cents per share, in the first quarter of 2009. The company has been streamlining its business since last year when Kennametal announced layoffs of 1,200 workers; in March the entire workforce took a week of unpaid furlough. Top executives also took a pay cut.
Looking forward the company expects global industrial activity and demand will continue to moderately improve through the rest of the fiscal year. As a result, Kennametal increased its guidance range for the fiscal year from 50 cents per share to 70 cents per share to a range of 65 cents per share to 75 cents per share, excluding restructuring charges. The company expects sales to be off 8 percent to 10 percent year-over-year on an organic basis.
For the third quarter the company expects organic sales to be up 5 percent to 10 percent over the year-ago period. In Thursday's release the company also declared a quarterly cash dividend of 12 cents a share.
Cardoso said the company is resonably optimistic in the continued economic recovery but uncertainty still exists. He said he sees encouraging signs that Kennametal's mature markets are recovering and emerging markets are growing in strength.