Hardmetal specialist Kennametal reports Q2 sales of US$488 million, compared with US$524 million in the same quarter last year. Sales decreased by 7%, reflecting a 6% decline due to divestiture, a 2% decrease due to fewer business days and a 1% unfavorable currency exchange impact, offset partially by 2% organic growth.
In the first half of fiscal 2017, sales were US$965 million, compared to US$1,079 million in the same period last year. Sales decreased by 11%, driven by divestiture impact of 8%, 1% unfavorable currency exchange impact, 1% decrease due to fewer business days and 1% organic decline.
‘The second quarter results reflect positive performance from our growth and cost reduction initiatives,’ said 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. […] We are pleased to see these improvements during a quarter where end markets were still relatively quiet. There is much work to do however as we strive to simplify, modernize and energize this company. […] Factory modernization is underway. This is a multi-year program that will likely take time to manifest in the quarterly numbers. In addition, we may accelerate some capital expenditures, which will put pressure on short-term free cash flow.
Rapid improvements
‘But these are all very positive decisions, as we believe that they will result in excellent project returns,’ he said. ‘We will be monitoring revenue run rates as the business has shown more rapid improvements than initially expected, meaning we may not be able to modernize fast enough to keep up with demand in select locations, causing us to keep direct hourly employment in certain circumstances somewhat higher than previously anticipated. But this is a good problem to have overall.’
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.
