Global decline in coal-mining hurts Kennametal profits, outlook
By Thomas Olson
Published: Thursday, July 25, 2013, 11:39 a.m.
High-tech manufacturer Kennametal Inc., which posted lower earnings on Thursday, faces continued slow growth for a year or so in the global markets it serves.
The Unity-based company is watching its costs so that it's well-positioned when markets recover, analysts said. Kennametal cut $31 million, or 6.5 percent, from the cost of goods sold last quarter versus the year earlier.
“I think the company is managing well in the current economic environment,” said Rudolf Hokanson, an analyst at Barrington Research in Chicago. “They are making the adjustments they need to, in terms of internal efficiencies and productivity and managing their resources appropriately, given difficult sales.”
Kennametal makes machining tools for manufacturers and employs about 13,000 people. The company serves customers in 60 countries in aerospace, energy, infrastructure, industrial production and other sectors.
“Industrial markets will improve, but not at a rapid rate, over the next 12 months,” said Eli Lustgarten, an analyst at Longbow Research in Independence, Ohio.
He expects the coal mining market, which Kennametal serves, will remain sluggish domestically and globally for 12 to 18 months.
But with record operating cash flow for the April-June quarter, Kennametal increased its quarterly dividend by 12.5 percent, or 2 cents a share, on Thursday. The company will pay 18 cents a share on Aug. 21 to shareholders of record Aug. 6.
“It's a sign of financial strength of the company,” Lustgarten said. “When the growth outlook is not as robust, you find other uses for cash, which include stock buybacks and dividend increases.”
The company increased its stock-repurchase authorization to 17 million shares from 12 million. It has 10.4 million shares available under the new limit.
Kennametal stock closed Thursday at $42.44 a share, up 90 cents.
The company reported that earnings fell 29 percent in the fiscal fourth quarter ended June 30 because of a drop in sales globally.
Kennmetal earned $61 million, or 76 cents a share, in the three-month period, compared with $86 million, or $1.06 a share, the year earlier.
Sales fell 9.2 percent to $671 million from $739 million.
For the full year, Kennametal earnings fell 34 percent to $203 million, or $2.52 a share, from $307 million, or $3.77 a share. Annual sales decreased 5.4 percent to $2.59 billion from $2.74 billion.
Thomas Olson is a Trib Total Media staff writer. Reach him at 412-320-7854 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Teach your engine well
- Wake up and smell the bacon app
- JPMorgan whistle-blower gets $64M for mortgage fraud tips
- Employers nationwide added 175K jobs despite harsh weather
- Natural gas industry buoyed by advancing technology
- Silicon ‘Valley of haves, have-nots’
- Google barge departs San Francisco to new home
- Disney to lay off 700 from interactive unit
- Winds of war hurt stocks
- Staples to shutter 225 stores as sales move online
- ADT settles deception charges