Kennametal announces strong fiscal 2019 first quarter results
November 5, 2018
Kennametal Inc., headquartered in Pittsburgh, Pennsylvania, USA, has reported strong results for its fiscal 2019 first quarter ended September 30, 2018. Sales were reported at $587 million, compared with $542 million in the prior year quarter, an increase of 8%, driven by 10% organic growth and partially offset by a 2% unfavourable currency exchange impact. Sales were said to have grown in all segments and regions.
“We delivered strong first quarter results. The continued progress on our strategic initiatives of growth and simplification/modernisation, coupled with the ongoing strength of our end markets delivered significant year-over-year improvement in almost all facets of our business,” stated Chris Rossi, President and Chief Executive Officer.
“In addition to capitalising on healthy market conditions, we focused on strategically investing in our simplification/modernisation initiative where we can improve our customer service and increase productivity,” he continued. “The team is balancing strong demand while executing our operational improvement strategy. Despite headwinds associated with the strengthening US dollar, we are confident that we are on track to deliver our fiscal 2019 adjusted EPS outlook.”
Operating income was reported to be $83 million, or 14.2% margin, compared to $52 million, or 9.6% margin, in the prior year quarter. Adjusted operating income was $84 million, compared to $59 million in the prior year quarter. The increase in adjusted operating income is said to be due primarily to organic sales growth and incremental simplification/modernisation benefits, partially offset by higher raw material costs and temporary manufacturing inefficiencies in certain locations in part due to strong market demand coupled with modernisation efforts in progress. Price realisation continued to outpace raw material cost inflation.
Segment results
Industrial segment sales of $321 million increased 8% from $297 million year-over-year, reflecting organic sales growth of 10%. Operating income was $59 million, compared to $32 million in the prior year quarter. Adjusted operating income was $59 million, compared to $36 million in the prior year quarter.
Widia sales of $49 million increased 8% from $45 million year-over-year, driven by organic sales growth of 11%. Operating income was $2 million, compared to operating loss of less than $1 million in the prior year quarter. Adjusted operating income was $2 million, compared to less than $1 million in the prior year quarter. The increase in adjusted operating income is driven primarily by organic sales growth.
Infrastructure sales of $217 million increased 9% from $200 million year-over-year, driven by organic sales growth of 10%. Operating income was $24 million, compared to $20 million in the prior year quarter. Adjusted operating income was $25 million, compared to $22 million in the prior year quarter. The increase in adjusted operating income is primarily driven by organic sales growth and favourable mix, partially offset by higher raw material costs.
