Kennametal reports positive third quarter results
April 26, 2017
Kennametal Inc. has reported positive results for its 2017 fiscal third quarter ended March 31, 2017. Sales were $529 million, compared with $498 million in the same quarter for 2016. The company saw an overall sales increase of 6%, driven by 5% organic growth and 2% increase due to more business days, partially offset by a 1% unfavourable currency exchange impact.
Operating income was $58 million, compared to $27 million in the same quarter last year. Adjusted operating income was $68 million, compared to $39 million in the prior year quarter. According to Kennametal, the increase in adjusted operating income reflects incremental restructuring benefits, organic sales growth, higher absorption and productivity and favourable mix, partially offset by higher performance-based compensation and the negative effects of higher raw material costs. Adjusted operating margin was 12.8% in the current period and 7.8% in the prior year period.
“This quarter’s results exceeded our expectations by almost every metric,” stated Ron De Feo, Kennametal’s President and CEO. “Simply stated, revenue grew and costs declined, reflecting continuing progress with the work we began nine months ago. Revenue grew 6%, of which 5% was organic growth, and every region grew. The Widia segment posted quarterly profit for the first time with an adjusted operating margin of 2.3%. The Industrial and Infrastructure segments posted adjusted operating margins of 15.1% and 12.3%, respectively. These are strong numbers, and we are pleased to see the improvements in both sales and margins this quarter.”
“Very little of this progress reflects the structural benefits from the modernisation and End-to-End initiatives that we have planned,” De Feo continued, “nor the benefits from the ongoing product and process simplification initiatives. The results of those programs will accrue to the Company over the next two to three years. This is a time of real change at Kennametal and we are excited to continue the work of improving the Company.”
