Kennametal Inc today reported its results for the 2016 fiscal Q1 ended 30 September 2015, with a loss per diluted share (LPS) of US$0.08, compared with the prior year quarter EPS of US$0.49.
Sales were US$555 million, compared with US$695 million in the same quarter last year. Sales decreased by 20%, reflecting a 13% organic decline due to weakening in our served end markets and a 7% unfavorable currency exchange impact.
Operating income was US$7 million, compared with operating income of US$61 million in the same quarter last year. Adjusted operating income was US$22 million, compared with US$68 million a year ago. The decrease in adjusted operating results in the current period was primarily driven by organic sales decline, lower fixed cost absorption, unfavorable mix, and unfavorable currency exchange, offsetpartially by restructuring benefits and lower raw material costs.
Kennametal has also signed a definitive agreement to sell several non-core businesses related to certain castings, steel-plate fabrication and deburring for an aggregate price of approximately $70 million in cash. Transaction proceeds are expected to be used for debt reduction. The transaction is anticipated to close within the company's fiscal second quarter, and the after-tax loss on the sale is currently estimated to be in the range of approximately US$100 million to US$120 million.
Core business strategy
‘We remain focused on what we can control and continue to execute our strategy to concentrate on our core businesses and deliver benefits from realigning our cost structure, adjusting our footprint and simplifying our portfolio,’ said Don Nolan, Kennametalp and CEO.
‘We are on track to achieve our restructuring goals and made a significant step in our portfolio alignment announcing that we have entered into an agreement to sell several non-core businesses representing approximately US$220 million in annual revenue. This transaction is expected to be accretive to our operating margin upon closing.’
‘The depth and duration of the downturn in the company's served end markets coupled with recent macroeconomic concerns has weakened the company's fiscal 2016 outlook,’ the company said in a press release. ‘The company now expects fiscal 2016 total sales to decline in the range of 10 to 14% and organic sales to decline in the range of 6 to 10%. Previously, the decline in total sales was projected to be in the range of 7 to 9%, with a decline in organic sales of 1 to 3%.’
This story is reprinted from material from Kennametal, with editorial changes made by Materials Today. The views expressed in this article do not necessarily represent those of Elsevier.
