Kennametal Inc. (NYSE: KMT), Pittsburgh, USA, has reported financial results for its fiscal 2017 and fourth quarter. Sales in fiscal year 2017 were reported to be $2,058 million, compared with $2,098 million in 2016. Sales for the year were said to have decreased by 2%, driven by divestiture impact of 4% and 2% unfavourable currency exchange, partially offset by 4% organic sales growth.
Operating income for the year was $113 million, compared with operating loss of $175 million in the same period 2016. Adjusted operating income was $189 million, compared with $126 million in the prior year. The company stated that adjusted operating income increased primarily due to incremental restructuring benefits, better absorption and productivity, organic sales growth and lower raw material costs, partially offset by unfavourable mix and higher employment-related costs. Adjusted operating margin was 9.2%, compared to 6.2% in the prior year.
“Fiscal year 2017 has been a year of substantial change at Kennametal on many levels,” commented Executive Chairman of the Board, Ron De Feo. “After re-organising the company to allow positive transformation, we focused on simplifying the company, improving sales execution and cost reduction. We have made significant achievements in each of these areas.
Sales in the fourth quarter were $565 million compared with $521 million in the same quarter last year. Sales increased by 8%, reflecting 12% organic growth, offset partially by a 2% decrease due to fewer business days and a 2% unfavourable currency exchange impact. Operating income was $40 million, compared with $25 million in the same quarter last year. Adjusted operating income was $63 million, compared with $47 million in the prior year quarter.
“The markets improved steadily through the year, and in the fourth quarter, organic sales grew at 12% – a quarterly rate of growth not seen since the December quarter of fiscal 2012. Total year organic growth was 4%, with year-over-year growth in all segments. Furthermore, our cost reduction achievements were significant and we believe that we are well-positioned to improve further as we move steadily forward with our multi-year plans,” added De Feo.
Kennametal stated that it expects 2018 organic sales growth of 2 to 4%, reflecting further significant achievements in cost reduction and margin improvement. Capital expenditures are expected to be in the range of $210 to $230 million as the company continues modernising facilities and optimising end-to-end processes.