Kennametal quarterly sales drop, company posts loss
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Hurt by weak markets, Kennametal Inc. said Monday it lost $6.2 million for its October-through-December quarter, as sales dropped by about 14%.
Kennametal, a producer of industrial tools, said it lost seven cents per shares in that quarter on sales of $505.1 million, compared to a gain of 66 cents a share on sales of $587.4 million for the same period in 2018.
Kennametal, which has its headquarters in Pittsburgh and corporate offices in Unity, said its restructuring actions saved about $11 million in the quarter and $69 million in annualized savings. The earnings per share reflects a 39-cent per share charge from the restructuring, the company said.
The company closed its Carbidie plant along Arona Road in Hempfield in December, resulting in the loss of 60 jobs as production was moved to a newer facility in Rogers, Ark. Kennametal also closed a plant in Germany and moved distribution work at a German facility to a third-party provider. Kennametal said it closed five facilities since its initiative a few years ago to permanently cut costs.
“Our second quarter results reflect weakening end-market conditions, particularly from greater than expected deceleration in the U.S., Germany and India markets, combined with headwinds developing in the 737 MAX supply chain,” said Christopher Rossi, Kennametal CEO.
While Boeing said it has 5,000 orders from 100 customers worldwide for its 737 MAX, the plane has been grounded since March 2019 because of two crashes that killed about 350 people. The Federal Aviation Administration and regulators globally have yet to permit the Boeing 737 MAX to fly as it undergoes changes to make it safer.
Kennametal expects its profits will increase in the first six months of the year, which is the last six months of its 2020 fiscal year, based on its savings from restructuring and lower raw material costs. The outlook also accounts for the effect of the 737 MAX on the aerospace supply chain.
Kennametal shares closed in Monday’s trading at $31.57, up 28 cents, or 0.89%.