- Email: [email protected]
Crane Co, USA
September 2003
Pump Industry Analyst
Crane Co, USA
Graco Inc, USA
Net Sales Of Which: Fluid Handling
Key Figures (US$ million) Second quarter ended
2003
2002
406.0
391.6
187.8
187.4
27.6.2003
28.6.2002
Net Sales Of Which: Industrial/Automotive Contractor Lubrication
146.4
132.8
57.7 76.9 11.8
50.8 68.6 13.4
Operating Profit Of Which: Fluid Handling
42.9
43.3
13.7
13.7
Cost of Products Sold
70.4
65.7
Net Income
26.0
26.6
Gross Profit
75.9
67.1
6.6
5.9
Product Development
4.3
4.5
36.3
31.7
2003
2002
782.4
763.2
Operating Earnings Of Which: Industrial/Automotive Contractor Lubrication
15.3 19.9 2.4
13.2 17.2 3.1
361.3
360.4
Net Earnings
24.5
21.5
71.1
80.1
21.1
26.1
Capital Expenditures
Six months ended 30.6 Net Sales Of Which: Fluid Handling Operating Profit Of Which: Fluid Handling Net Income
42.5
19.3
Capital Expenditures
13.1
12.4
COMMENT Fluid Handling’s second quarter sales and operating profit were both essentially level with last year. Valve sales improved 1.4% on strong demand for Valve Services and Crane Process Flow Technology products, partially offset by continued weakness in the chemical process industry, power, marine and general industrial markets. Pump sales matched 2002’s second quarter while operating profit improved 43%. These gains reflect progress in the use of a lowcost manufacturing facility in China, as well as the sale of Crane’s Chempump unit earlier this year. Crane Supply’s sales fell 4%, while operating profit improved 6%, as the weakened Canadian econo-
my and industrial demand were more than offset by cost saving initiatives. Backlog for the Fluid Handling segment at 30 June 2003 was US$140.7 million, a 2% improvement on the US$138.1 million backlog at the end of March 2003. Fluid Handling has started to see the benefits of lowcost manufacturing facilities and plant consolidations, which are expected to continue in the second half of the year. Closure and severance costs, in addition to declining end markets, are expected to negatively affect operating profit in the second half of the year. Management now expects full year 2003 Fluid Handling operating profit to show a 10–15% improvement over 2002. ■
Six months ended 27.6.2003
28.6.2002
Net Sales Of Which: Industrial/Automotive Contractor Lubrication
266.0
240.7
110.1 131.7 24.2
96.9 119.7 24.1
Cost of Products Sold
127.1
118.3
Gross Profit
138.9
122.3
Product Development
8.8
8.7
Operating Earnings Of Which: Industrial/Automotive Contractor Lubrication
63.4
55.2
29.3 30.7 5.6
25.0 28.1 5.5
Net Earnings
42.7
37.1
COMMENT Despite soft conditions in North America and Europe, Graco CEO David Roberts says they are on track for another record year. In North America, demand remains flat for Industrial/Automotive and Lubrication products while the Contractor Equipment Division continues to benefit from strong
customer demand and new launches. Graco expects Europe to remain weak for at least the rest of 2003. While current economic conditions make growth difficult in most regions, year-to-date results give Graco confidence that its long-term growth strategies are paying off. ■
7
COMPANY WATCH
Key Figures (US$ million) Three months ended 30.6
Pump Industry Analyst
Crane Co, USA
Graco Inc, USA
Net Sales Of Which: Fluid Handling
Key Figures (US$ million) Second quarter ended
2003
2002
406.0
391.6
187.8
187.4
27.6.2003
28.6.2002
Net Sales Of Which: Industrial/Automotive Contractor Lubrication
146.4
132.8
57.7 76.9 11.8
50.8 68.6 13.4
Operating Profit Of Which: Fluid Handling
42.9
43.3
13.7
13.7
Cost of Products Sold
70.4
65.7
Net Income
26.0
26.6
Gross Profit
75.9
67.1
6.6
5.9
Product Development
4.3
4.5
36.3
31.7
2003
2002
782.4
763.2
Operating Earnings Of Which: Industrial/Automotive Contractor Lubrication
15.3 19.9 2.4
13.2 17.2 3.1
361.3
360.4
Net Earnings
24.5
21.5
71.1
80.1
21.1
26.1
Capital Expenditures
Six months ended 30.6 Net Sales Of Which: Fluid Handling Operating Profit Of Which: Fluid Handling Net Income
42.5
19.3
Capital Expenditures
13.1
12.4
COMMENT Fluid Handling’s second quarter sales and operating profit were both essentially level with last year. Valve sales improved 1.4% on strong demand for Valve Services and Crane Process Flow Technology products, partially offset by continued weakness in the chemical process industry, power, marine and general industrial markets. Pump sales matched 2002’s second quarter while operating profit improved 43%. These gains reflect progress in the use of a lowcost manufacturing facility in China, as well as the sale of Crane’s Chempump unit earlier this year. Crane Supply’s sales fell 4%, while operating profit improved 6%, as the weakened Canadian econo-
my and industrial demand were more than offset by cost saving initiatives. Backlog for the Fluid Handling segment at 30 June 2003 was US$140.7 million, a 2% improvement on the US$138.1 million backlog at the end of March 2003. Fluid Handling has started to see the benefits of lowcost manufacturing facilities and plant consolidations, which are expected to continue in the second half of the year. Closure and severance costs, in addition to declining end markets, are expected to negatively affect operating profit in the second half of the year. Management now expects full year 2003 Fluid Handling operating profit to show a 10–15% improvement over 2002. ■
Six months ended 27.6.2003
28.6.2002
Net Sales Of Which: Industrial/Automotive Contractor Lubrication
266.0
240.7
110.1 131.7 24.2
96.9 119.7 24.1
Cost of Products Sold
127.1
118.3
Gross Profit
138.9
122.3
Product Development
8.8
8.7
Operating Earnings Of Which: Industrial/Automotive Contractor Lubrication
63.4
55.2
29.3 30.7 5.6
25.0 28.1 5.5
Net Earnings
42.7
37.1
COMMENT Despite soft conditions in North America and Europe, Graco CEO David Roberts says they are on track for another record year. In North America, demand remains flat for Industrial/Automotive and Lubrication products while the Contractor Equipment Division continues to benefit from strong
customer demand and new launches. Graco expects Europe to remain weak for at least the rest of 2003. While current economic conditions make growth difficult in most regions, year-to-date results give Graco confidence that its long-term growth strategies are paying off. ■
7
COMPANY WATCH
Key Figures (US$ million) Three months ended 30.6