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Donaldson Co Inc, USA
May 2007
Filtration Industry Analyst
Amiad Filtration Systems Ltd, Israel
Donaldson Co Inc, USA Key Figures (US$ million) Second quarter ended 31.1 2007
2006
2006
2005
Revenue
44.1
42.4
Net Sales
463.7
392.9
Cost of Sales
22.1
21.1
Cost of Sales
322.5
268.1
Gross Profit
22.0
21.3
Gross Margin
141.2
124.8
Selling and Marketing Costs
11.5
10.6
Operating Expenses
98.3
87.0
Administrative and General Expenses
Operating Income
42.9
37.8
5.6
5.5
Earnings before Income Taxes
42.0
37.6
Amortization of Other Assets
0.3
0.3
Net Earnings
31.3
26.9
Operating Profit
4.6
4.9
Profit before Income Tax
3.7
4.1
Taxes on Income
0.7
1.2
Profit for the Period
3.0
2.9
COMMENT Amiad, the Israel-based water filter and filtration systems manufacturer, posted modest gains in fiscal 2006 compared to the year earlier, but believes it is well positioned for further growth in 2007. The company’s turnover rose 4% in 2006 to reach US$44.1 million, while its net profit made a 3% gain to finish at US$3.0 million. Yossi Katz, Amiad’s CEO, said that throughout the year the company had continued to build solid foundations for future growth and that a strong finish to the year had been carried into 2007. “Order levels have been strong since the beginning of 2007, leading to a higher current order backlog compared to the corresponding period last year,” he said. During 2006, Katz said that Amiad had strengthened its product portfolio with the introduction of a range of new products, such as automatic disk filters for the irrigation market and microfibre filters aimed at general water treatment applications. In addition, he said the company had
continued to expand its global presence in key markets including Australia, China, Japan, Singapore and the USA. In China, Katz said Amiad had achieved double-digit growth in 2006, including the successful supply of the first phase of a project worth approximately US$400 000 for sewage treatment for the Olympic Village in Beijing. In the second phase, he added that additional orders of similar magnitude and purpose had also recently been received. Amiad also delivered its first water treatment project in Russia during 2006 and initiated sales into India during the second half of the year through the supply of watertreatment systems to remove iron from drinking water. In South America, Katz said the company had seen good growth in products supplied to the oil and gas industries in Brazil and currently had orders for three new projects. Katz said that the company is confident of delivering further sales growth throughout 2007. ■
Six months ended 31.1 2007
2006
Net Sales
910.2
796.3
Cost of Sales
625.1
540.0
Gross Margin
285.1
256.3
Operating Expenses
188.5
175.1
Operating Income
96.6
81.2
Earnings before Income Taxes
94.4
81.5
Net Earnings
67.3
59.1
COMMENT Donaldson enjoyed a strong second quarter of fiscal 2007, with net sales up 18% yearon-year to a record US$463.7 million, while net income rose 16% to US$31.3 million. “Sales growth was very strong during the quarter, supporting our outlook for another record year,” Bill Cook, Donaldson’s chair, president and CEO, said. “Our sales were especially good in Europe and Asia, where solid economic conditions and our well-developed market presence combined to deliver growth in excess of 25% in both regions.” Cook said that Donaldson’s year-to-date operating margin of 10.6% compared favourably to 10.2% a year ago. “Global economic conditions remain healthy for
most of our businesses, giving us confidence in delivering our 18th consecutive year of record earnings,” he said. Looking forward, Cook said the company expected its Engine Products division to be effected by an anticipated significant decline in North American heavy duty truck build rates as new diesel emission standards were introduced. However, the segment’s other markets, including international construction and mining equipment, are expected to remain strong. The Industrial Products segment is expected to benefit from continuing healthy global manufacturing investment. Donaldson also expects is full-year gas turbine sales to continue to rebound. ■
11
COMPANY WATCH
Key Figures (US$ million) Year ended 31.12
Filtration Industry Analyst
Amiad Filtration Systems Ltd, Israel
Donaldson Co Inc, USA Key Figures (US$ million) Second quarter ended 31.1 2007
2006
2006
2005
Revenue
44.1
42.4
Net Sales
463.7
392.9
Cost of Sales
22.1
21.1
Cost of Sales
322.5
268.1
Gross Profit
22.0
21.3
Gross Margin
141.2
124.8
Selling and Marketing Costs
11.5
10.6
Operating Expenses
98.3
87.0
Administrative and General Expenses
Operating Income
42.9
37.8
5.6
5.5
Earnings before Income Taxes
42.0
37.6
Amortization of Other Assets
0.3
0.3
Net Earnings
31.3
26.9
Operating Profit
4.6
4.9
Profit before Income Tax
3.7
4.1
Taxes on Income
0.7
1.2
Profit for the Period
3.0
2.9
COMMENT Amiad, the Israel-based water filter and filtration systems manufacturer, posted modest gains in fiscal 2006 compared to the year earlier, but believes it is well positioned for further growth in 2007. The company’s turnover rose 4% in 2006 to reach US$44.1 million, while its net profit made a 3% gain to finish at US$3.0 million. Yossi Katz, Amiad’s CEO, said that throughout the year the company had continued to build solid foundations for future growth and that a strong finish to the year had been carried into 2007. “Order levels have been strong since the beginning of 2007, leading to a higher current order backlog compared to the corresponding period last year,” he said. During 2006, Katz said that Amiad had strengthened its product portfolio with the introduction of a range of new products, such as automatic disk filters for the irrigation market and microfibre filters aimed at general water treatment applications. In addition, he said the company had
continued to expand its global presence in key markets including Australia, China, Japan, Singapore and the USA. In China, Katz said Amiad had achieved double-digit growth in 2006, including the successful supply of the first phase of a project worth approximately US$400 000 for sewage treatment for the Olympic Village in Beijing. In the second phase, he added that additional orders of similar magnitude and purpose had also recently been received. Amiad also delivered its first water treatment project in Russia during 2006 and initiated sales into India during the second half of the year through the supply of watertreatment systems to remove iron from drinking water. In South America, Katz said the company had seen good growth in products supplied to the oil and gas industries in Brazil and currently had orders for three new projects. Katz said that the company is confident of delivering further sales growth throughout 2007. ■
Six months ended 31.1 2007
2006
Net Sales
910.2
796.3
Cost of Sales
625.1
540.0
Gross Margin
285.1
256.3
Operating Expenses
188.5
175.1
Operating Income
96.6
81.2
Earnings before Income Taxes
94.4
81.5
Net Earnings
67.3
59.1
COMMENT Donaldson enjoyed a strong second quarter of fiscal 2007, with net sales up 18% yearon-year to a record US$463.7 million, while net income rose 16% to US$31.3 million. “Sales growth was very strong during the quarter, supporting our outlook for another record year,” Bill Cook, Donaldson’s chair, president and CEO, said. “Our sales were especially good in Europe and Asia, where solid economic conditions and our well-developed market presence combined to deliver growth in excess of 25% in both regions.” Cook said that Donaldson’s year-to-date operating margin of 10.6% compared favourably to 10.2% a year ago. “Global economic conditions remain healthy for
most of our businesses, giving us confidence in delivering our 18th consecutive year of record earnings,” he said. Looking forward, Cook said the company expected its Engine Products division to be effected by an anticipated significant decline in North American heavy duty truck build rates as new diesel emission standards were introduced. However, the segment’s other markets, including international construction and mining equipment, are expected to remain strong. The Industrial Products segment is expected to benefit from continuing healthy global manufacturing investment. Donaldson also expects is full-year gas turbine sales to continue to rebound. ■
11
COMPANY WATCH
Key Figures (US$ million) Year ended 31.12