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Donaldson Co Inc, USA
FIA Jan04.qxd
19/01/2004
10:00
Page 5
(Black plate)
January 2004
Filtration Industry Analyst
Donaldson Co Inc, USA Profile Donaldson manufactures filtration systems and replacement parts, with its product mix including air and liquid filters and exhaust and emission-control products for mobile equipment; in-plant air cleaning systems; compressed air purification systems; air intake systems for industrial gas turbines, and specialized filters for a diverse range of applications. Products are manufactured at more than 30 Donaldson plants worldwide and through three joint ventures.
COMMENT Donaldson performed well in difficult conditions in fiscal 2003 and appears well placed for another good year in 2004. During the last year the company had to cope with a US$100 million drop in gas turbine sales and depressed North American industrial spending. William Van Dyke, Donaldon’s chairman, president and CEO, pointed to four key areas that contributed to overcoming these difficulties. First, was the strong performance in the North American truck market, particularly through its new PowerCore filters. The second factor was the performance of its international operations, which contributed 50% of sales. The third factor was the successful integration of German-based Ultrafilter, which was acquired in July 2002. Finally, Van Dyke pointed to the efforts of the gas turbine operations to manage both manufacturing capacity and operating expenses in the face of its considerable downturn. The company is expecting the trends of 2003 to continue during 2004. ■
Key Figures (US$ million) Donaldson Co Inc
Year ended 31.7 2003
2002
2001
2000
1999
1218.3
1126.0
1137.0
1092.3
944.1
683.3 535.0
611.6 514.4
606.8 530.2
674.0 418.3
611.4 332.8
Gross Margin
391.2
349.5
341.7
327.5
275.7
Operating Income
131.8
123.9
112.1
105.6
88.4
Earnings before Income Taxes
130.6
119.0
104.9
100.3
89.2
95.3
86.9
75.5
70.2
62.4
7.8
7.7
6.6
6.4
6.6
18.3
19.2
19.1
19.4
19.0
Net Sales Of Which: Engine Products Industrial Products
Net Earnings Return on Sales (%) Return on Investment (%) Contact Details Chairman, president and CEO: Address:
William Van Dyke 1400 West 94th St Minneapolis MN 55431 USA
Tel: +1 952 887 3131 Fax: +1 952 887 3005 Web: www.donaldson.com
Recent Events • Donaldson was awarded the ISO/TS 16949 global automotive supplier certification for its US engine facilities in Minneapolis by BSI Management Systems in December 2003. • Stephen Sanger retired from the board of Donaldson in December 2003. Sanger, chairman and CEO of General Mills Inc, served as a director from 1992 including contributions as a member and chair of both the human resources and audit committees.
5
COMPANY PROFILE
Analysis Donaldson reported sales in 2003 of US$1.2 billion, up 8.2% on the previous year and its 14th consecutive year of double-digit earnings growth. The company’s Engine Products division saw sales rise 11.7% to US$683.3 million. Among the strong performers was North American transportation sales which grew 20.0% from 2002 as light-duty diesel sales more than doubled, reflecting additional sales from the company’s new small diesel filtration offering. Sales in the Industrial Products division climbed 4.0% on fiscal 2002 to US$535.0 million. Excluding Ultrafilter sales, however, the division’s revenue fell 19.5% reflecting the contraction in North American gas turbine product sales. Gross margin for the year increased from 31.0% in 2002 to 32.1%. The addition of Ultrafilter was the main driver, while also contributing were continued efforts to improve manufacturing infrastructure and reduce product costs through plant rationalization. Operating expenses as a percentage of sales was 21.3% compared with 20.0% a year earlier. Again, the addition of Ultrafilter was the main factor behind the change. Total backlog was US$313.1 million, down 1.8% on a year earlier.
19/01/2004
10:00
Page 5
(Black plate)
January 2004
Filtration Industry Analyst
Donaldson Co Inc, USA Profile Donaldson manufactures filtration systems and replacement parts, with its product mix including air and liquid filters and exhaust and emission-control products for mobile equipment; in-plant air cleaning systems; compressed air purification systems; air intake systems for industrial gas turbines, and specialized filters for a diverse range of applications. Products are manufactured at more than 30 Donaldson plants worldwide and through three joint ventures.
COMMENT Donaldson performed well in difficult conditions in fiscal 2003 and appears well placed for another good year in 2004. During the last year the company had to cope with a US$100 million drop in gas turbine sales and depressed North American industrial spending. William Van Dyke, Donaldon’s chairman, president and CEO, pointed to four key areas that contributed to overcoming these difficulties. First, was the strong performance in the North American truck market, particularly through its new PowerCore filters. The second factor was the performance of its international operations, which contributed 50% of sales. The third factor was the successful integration of German-based Ultrafilter, which was acquired in July 2002. Finally, Van Dyke pointed to the efforts of the gas turbine operations to manage both manufacturing capacity and operating expenses in the face of its considerable downturn. The company is expecting the trends of 2003 to continue during 2004. ■
Key Figures (US$ million) Donaldson Co Inc
Year ended 31.7 2003
2002
2001
2000
1999
1218.3
1126.0
1137.0
1092.3
944.1
683.3 535.0
611.6 514.4
606.8 530.2
674.0 418.3
611.4 332.8
Gross Margin
391.2
349.5
341.7
327.5
275.7
Operating Income
131.8
123.9
112.1
105.6
88.4
Earnings before Income Taxes
130.6
119.0
104.9
100.3
89.2
95.3
86.9
75.5
70.2
62.4
7.8
7.7
6.6
6.4
6.6
18.3
19.2
19.1
19.4
19.0
Net Sales Of Which: Engine Products Industrial Products
Net Earnings Return on Sales (%) Return on Investment (%) Contact Details Chairman, president and CEO: Address:
William Van Dyke 1400 West 94th St Minneapolis MN 55431 USA
Tel: +1 952 887 3131 Fax: +1 952 887 3005 Web: www.donaldson.com
Recent Events • Donaldson was awarded the ISO/TS 16949 global automotive supplier certification for its US engine facilities in Minneapolis by BSI Management Systems in December 2003. • Stephen Sanger retired from the board of Donaldson in December 2003. Sanger, chairman and CEO of General Mills Inc, served as a director from 1992 including contributions as a member and chair of both the human resources and audit committees.
5
COMPANY PROFILE
Analysis Donaldson reported sales in 2003 of US$1.2 billion, up 8.2% on the previous year and its 14th consecutive year of double-digit earnings growth. The company’s Engine Products division saw sales rise 11.7% to US$683.3 million. Among the strong performers was North American transportation sales which grew 20.0% from 2002 as light-duty diesel sales more than doubled, reflecting additional sales from the company’s new small diesel filtration offering. Sales in the Industrial Products division climbed 4.0% on fiscal 2002 to US$535.0 million. Excluding Ultrafilter sales, however, the division’s revenue fell 19.5% reflecting the contraction in North American gas turbine product sales. Gross margin for the year increased from 31.0% in 2002 to 32.1%. The addition of Ultrafilter was the main driver, while also contributing were continued efforts to improve manufacturing infrastructure and reduce product costs through plant rationalization. Operating expenses as a percentage of sales was 21.3% compared with 20.0% a year earlier. Again, the addition of Ultrafilter was the main factor behind the change. Total backlog was US$313.1 million, down 1.8% on a year earlier.