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GUD Holdings Limited, Australia
May 2005
Filtration Industry Analyst
Key Figures (US$ million) Second quarter ended 31.1 2005
2004
Net sales
388.4
332.2
Cost of sales
267.2
228.8
Gross margin
121.3
103.4
Operating expenses
84.3
74.5
Operating income
37.0
34.5
Earnings before income taxes 36.6
34.2
Net earnings
GUD Holdings Limited, Australia Key Figures (A$ million) Six months ended 31.12 2004
2003
Sales Revenue Of Which: Ryco/Wesfil
210.9
211.6
40.2
44.2
31.9
35.1
25.0
Trading EBITA* Of Which: Ryco/Wesfil
8.7
9.6
17.4
30.4
2005
2004
Reported EBIT* Of Which: Ryco/Wesfil
(4.0)
6.5
Net sales
761.3
660.4
Net Trading Profit Before Tax
28.4
32.0
Cost of sales
523.6
450.4
Net Trading Profit After Tax
19.2
22.4
Gross margin
237.7
210.0
Net Profit Before Tax
15.7
29.0
164.6
145.4
Net Profit After Tax
10.4
20.3
73.1
70.2
Earnings before income taxes 74.1
69.3
Net earnings
50.6
26.7 Six months ended 31.1
Operating expenses Operating income
54.1
COMMENT Donaldson has posted record second quarter net income of US$26.7 million, up from US$25.0 million last year. Sales were a record US$388.4 million, up from US$332.2 million in fiscal 2004. Bill Cook, Donaldson’s president and chief executive officer, said the company faced several major challenges during the quarter including the recovery of steel prices and several large lower-margin jobs in its gas turbine business. “In addition, we also had the tough comparison with last year’s second quarter as it included the US$3.2 million unusual gain from the sale of land in Japan, net of related plant rationalisation costs. Excluding this unusual gain, we started to
see operating leverage improvement year over year.” The company has also recently announced its acquisition of Le Bozec Filtration and Systems, headquartered in Paris, France, for an undisclosed sum. Le Bozec designs, manufactures and sells filtration equipment for the management of air, fuel, hydraulic fluid and air pressure on aircraft and helicopters and has annual sales of approximately US$9 million. “Le Bozec complements our existing filtration business well,” said Nick Priadka, Donaldson’s Senior Vice President, International. “The addition of Le Bozec broadens our product offering and customer base within the aircraft industry.” ■
* EBIT/A: Earnings Before Interest, Taxes/Amortisation
COMMENT Australian manufacturer GUD Holdings has reported a net profit of A$10.4 million for the half year ending 31 December 2004, down from the A$20.3 million posted a year earlier. The profit decline was largely due to a restructuring charge of A$8.8 million after tax for the closure of the company’s Ryco automotive filter manufacturing plant in Melbourne, which ceased production at the end of February 2005. GUD Automotive, which had already imported half of its automotive filter range, is now sourcing all of its automotive filters from international suppliers. GUD Automotive will, however, continue to employ more than 50 people in various functions and maintain its design, development, validation and quality assurances resources for its filtration products. GUD Holdings reported a 10% decline in its
trading Earnings Before Interest and Taxes (EBIT) to A$30.1 million for the halfyear. The lower trading performance followed a 43% increase last year.Ryco/Wesfil maintained strong margins despite intense import competition and relatively soft demand in the automotive aftermarket. Managing director Ian Campbell said the Ryco/ Wesfil business was well positioned to sustain strong returns following the completion of the restructuring initiatives and that the full benefits of Ryco Australia's transition from manufacturer to importer/marketer would be reflected in the 2006 fiscal year. Campbell said that the company’s trading profit result for the second halfyear was expected to be in line with last year. “It will reflect the continuing benefits of new product offerings and our offshore sourcing strategies,” he said. ■
11
COMPANY WATCH
Donaldson Co Inc, USA
Filtration Industry Analyst
Key Figures (US$ million) Second quarter ended 31.1 2005
2004
Net sales
388.4
332.2
Cost of sales
267.2
228.8
Gross margin
121.3
103.4
Operating expenses
84.3
74.5
Operating income
37.0
34.5
Earnings before income taxes 36.6
34.2
Net earnings
GUD Holdings Limited, Australia Key Figures (A$ million) Six months ended 31.12 2004
2003
Sales Revenue Of Which: Ryco/Wesfil
210.9
211.6
40.2
44.2
31.9
35.1
25.0
Trading EBITA* Of Which: Ryco/Wesfil
8.7
9.6
17.4
30.4
2005
2004
Reported EBIT* Of Which: Ryco/Wesfil
(4.0)
6.5
Net sales
761.3
660.4
Net Trading Profit Before Tax
28.4
32.0
Cost of sales
523.6
450.4
Net Trading Profit After Tax
19.2
22.4
Gross margin
237.7
210.0
Net Profit Before Tax
15.7
29.0
164.6
145.4
Net Profit After Tax
10.4
20.3
73.1
70.2
Earnings before income taxes 74.1
69.3
Net earnings
50.6
26.7 Six months ended 31.1
Operating expenses Operating income
54.1
COMMENT Donaldson has posted record second quarter net income of US$26.7 million, up from US$25.0 million last year. Sales were a record US$388.4 million, up from US$332.2 million in fiscal 2004. Bill Cook, Donaldson’s president and chief executive officer, said the company faced several major challenges during the quarter including the recovery of steel prices and several large lower-margin jobs in its gas turbine business. “In addition, we also had the tough comparison with last year’s second quarter as it included the US$3.2 million unusual gain from the sale of land in Japan, net of related plant rationalisation costs. Excluding this unusual gain, we started to
see operating leverage improvement year over year.” The company has also recently announced its acquisition of Le Bozec Filtration and Systems, headquartered in Paris, France, for an undisclosed sum. Le Bozec designs, manufactures and sells filtration equipment for the management of air, fuel, hydraulic fluid and air pressure on aircraft and helicopters and has annual sales of approximately US$9 million. “Le Bozec complements our existing filtration business well,” said Nick Priadka, Donaldson’s Senior Vice President, International. “The addition of Le Bozec broadens our product offering and customer base within the aircraft industry.” ■
* EBIT/A: Earnings Before Interest, Taxes/Amortisation
COMMENT Australian manufacturer GUD Holdings has reported a net profit of A$10.4 million for the half year ending 31 December 2004, down from the A$20.3 million posted a year earlier. The profit decline was largely due to a restructuring charge of A$8.8 million after tax for the closure of the company’s Ryco automotive filter manufacturing plant in Melbourne, which ceased production at the end of February 2005. GUD Automotive, which had already imported half of its automotive filter range, is now sourcing all of its automotive filters from international suppliers. GUD Automotive will, however, continue to employ more than 50 people in various functions and maintain its design, development, validation and quality assurances resources for its filtration products. GUD Holdings reported a 10% decline in its
trading Earnings Before Interest and Taxes (EBIT) to A$30.1 million for the halfyear. The lower trading performance followed a 43% increase last year.Ryco/Wesfil maintained strong margins despite intense import competition and relatively soft demand in the automotive aftermarket. Managing director Ian Campbell said the Ryco/ Wesfil business was well positioned to sustain strong returns following the completion of the restructuring initiatives and that the full benefits of Ryco Australia's transition from manufacturer to importer/marketer would be reflected in the 2006 fiscal year. Campbell said that the company’s trading profit result for the second halfyear was expected to be in line with last year. “It will reflect the continuing benefits of new product offerings and our offshore sourcing strategies,” he said. ■
11
COMPANY WATCH
Donaldson Co Inc, USA