Kennametal Inc, South Carolina, USA, has reported results for its fiscal 2017 second quarter ended December 31, 2016, which saw sales of $488 million, compared with $524 million in the same quarter 2015. Operating income was $24 million, compared to an operating loss of $234 million in the same quarter last year.
“The second quarter results reflect positive performance from our growth and cost reduction initiatives,” stated Ron De Feo, Kennametal President and CEO. “Total company organic sales in the quarter grew 2%, marking the first quarterly consolidated organic growth in over two years.”
Organically, Kennametal Industrial grew 4%, Widia 5%, and Infrastructure experienced no growth versus the prior year. The adjusted gross profit margin increased 260 basis points and the adjusted operating expense decreased 90 basis points, resulting in an improvement of 350 basis points to the adjusted operating margin.
The company has stated that its adjusted operating income was $36 million, compared to $18 million in the prior year quarter. The increase in adjusted operating income reflects incremental restructuring benefits, higher absorption and productivity and the positive effects of lower raw material costs and sales volume growth, partially offset by the negative impacts of unfavourable price and mix.
“There is much work to do however as we strive to simplify, modernise and energise this company. The progress we are making in lowering employment costs is generally on track and evident now in our run rates. We are at the beginning stages of product line simplification, and the End-to-End initiatives by product line are accelerating as we examine all our value streams for simplification and efficiency,” added De Feo.