Kennametal announces fiscal 2016 third quarter results
May 10, 2016
Kennametal Inc. has reported mixed results for the 2016 fiscal third quarter ended March 31, 2016. Sales were $498 million, compared with $639 million in the same quarter last year. Sales decreased by 22%, reflecting a 10% decline due to divestiture, an 8% organic decline and a 4% unfavourable currency exchange impact.
Operating income was $27 million, compared with an operating loss of $120 million in the same quarter last year. Adjusted operating income was $39 million, compared with $56 million a year ago. Kennametal stated that the decrease in adjusted operating results was driven primarily by organic sales decline, unfavourable mix, lower fixed cost absorption and unfavourable currency exchange, offset partially by lower raw material costs and restructuring benefits. Adjusted operating margin was 7.8% in the current period and 8.8% in the prior year period.
“Kennametal’s third quarter performance reflects progress from operating results in a challenging environment, and benefited from a favourable tax rate,” said Ron De Feo, Kennametal President and CEO. “The 2016 third quarter adjusted operating margin of 7.8% is substantially higher than the year-to-date December fiscal 2016 adjusted operating margin of 3.6%, reflecting sequential volume growth and lower raw material costs. Infrastructure made progress, posting adjusted operating income of $10 million compared with losses for the first half of the year, and Industrial results reflect better sequential margins as well with adjusted operating income of $30 million. Adjusted EPS, while still lower year-over-year, strengthened sequentially as a result of the higher gross margins and lower operating expenses.”
“We have a lot of improvement opportunities within Kennametal to simplify operations, lower costs and drive margin improvements over time. We need to be more customer responsive and grow market share with innovation, entrepreneurship and speed – all things we are working on and plan to discuss with the investment community in the future,” De Feo continued.
