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Eaton Corp, USA
COMPANY WATCH
Eaton Corp, USA
Pall Corp, USA
Key Figures (US$ million) Fourth quarter ended 31.12 2007
2006
Net Sales Of Which: Fluid Power
3374
3068
1150
985
Cost of Products Sold
2428
Key Figures (US$ million) First quarter ended 31.10 2007
2006
561.0
499.3
2274
Net Sales Of Which: Life Sciences Industrial
214.6 346.4
193.0 306.3
84
72
Cost of Sales
299.7
275.6
Operating Profit Of Which: Fluid Power
437
353
Gross Profit
261.3
223.7
R&D Expenses
16.9
14.2
143
103
Net Income
256
241
Earnings before Interest & Income Taxes
64.7
35.0
R&D Expenses
Year ended 31.12 Net Sales Of Which: Fluid Power Cost of Products Sold R&D Expenses Operating Profit Of Which: Fluid Power Net Income
2007
2006
13 033
12 232
4759
4184
9382
8949
335
315
1668
1468
518
422
994
950
COMMENT Diversified industrial manufacturer Eaton Corp has posted full year 2007 sales of US$13.0 billion, 7% above 2006. Net income was a record at US$994 million, 5% higher than a year earlier, while operating earnings in 2007 totalled US$1036 million, an increase of 6%. For the fourth quarter, Eaton’s net sales increased 10% to US$3.3 billion, with 40% of the increase coming from acquisitions, a further 40% from higher exchanges rates and 20% from organic growth. In the Fluid Power segment, home to Eaton’s filtration operations, fourth quarter sales were US$1.2 billion, 17% above the 2006 equivalent. Excluding recent acquisitions, sales grew 11%.
10
Filtration Industry Analyst
“We had a good fourth quarter, with results above the high end of our guidance despite weakness in several of our end markets in the USA,” Alexander Cutler, Eaton’s chair and CEO, said. “We had a record 13.5% segment operating margin, with all segments earning well in excess of 12%. The balance of earnings in the quarter was attractive, with our Electrical and Fluid Power businesses representing over 70%of our overall segment operating earnings.” Looking forward, Cutler said Eaton expected overall revenue growth in 2008 to be around 4%. He said while US markets were only likely to increase by 2–3%, sales in international markets were likely to grow by 5–6%. ■ www.eaton.com
COMMENT Pall Corp has posted good results for the first quarter of fiscal 2008, with its sales up 12.4% on a year earlier at US$561 million and its EBIT 84.9% stronger at US$64.7 million. Like the previous quarter, however, the company has delayed reporting its net income figures as it undertakes an internal audit following tax inquiries from US authorities. “We maintained sales momentum with broad-based growth across both our Life Sciences and Industrial segments,” Eric Krasnoff, chair and CEO, said. “Strong systems sales were led by the municipal water market and also reflect continued customer demand for our Total Fluid Management capabilities.” In Pall’s Life Science’s segment, results for the company’s BioPharmaceuticals operations were the star performer with sales up 16.7% on a year earlier at US$104.4 million driven by strong systems sales in the Western Hemisphere and a double-digit increase in consumables sales in Europe. Overall the Life Sciences segment gross margin improved to 51.8% from 49.3% posted a year earlier, which the company
attributed to improved pricing and savings generated from ongoing continuous improvement efforts and its facilities rationalization program. Operating profit increased 36% to US$39.8 million. In Pall’s Industrial segment, sales growth was led by the General Industrial business unit that enjoyed a 19.2% increase on the year earlier quarter to reach US$208.7 million. Within the unit consumables sales increased in all markets, while revenues in the municipal water market almost doubled led by over 200% growth in systems sales in the Western Hemisphere. The Industrial segment’s Aerospace and Transportation division posted an overall sales growth of 9.8% on the2007 figure to reach US$66.3 million, with double-digit growth in commercial sales was partly offset by a reduction in military business. “Continued execution on our broad strategic initiatives is reflected in sales and operating profit improvement,” Krasnoff said. “We look forward to completing our restatement as soon as practicable following the Audit Committee’s inquiry into the tax matter”. ■ www.pall.com
March 2008
Eaton Corp, USA
Pall Corp, USA
Key Figures (US$ million) Fourth quarter ended 31.12 2007
2006
Net Sales Of Which: Fluid Power
3374
3068
1150
985
Cost of Products Sold
2428
Key Figures (US$ million) First quarter ended 31.10 2007
2006
561.0
499.3
2274
Net Sales Of Which: Life Sciences Industrial
214.6 346.4
193.0 306.3
84
72
Cost of Sales
299.7
275.6
Operating Profit Of Which: Fluid Power
437
353
Gross Profit
261.3
223.7
R&D Expenses
16.9
14.2
143
103
Net Income
256
241
Earnings before Interest & Income Taxes
64.7
35.0
R&D Expenses
Year ended 31.12 Net Sales Of Which: Fluid Power Cost of Products Sold R&D Expenses Operating Profit Of Which: Fluid Power Net Income
2007
2006
13 033
12 232
4759
4184
9382
8949
335
315
1668
1468
518
422
994
950
COMMENT Diversified industrial manufacturer Eaton Corp has posted full year 2007 sales of US$13.0 billion, 7% above 2006. Net income was a record at US$994 million, 5% higher than a year earlier, while operating earnings in 2007 totalled US$1036 million, an increase of 6%. For the fourth quarter, Eaton’s net sales increased 10% to US$3.3 billion, with 40% of the increase coming from acquisitions, a further 40% from higher exchanges rates and 20% from organic growth. In the Fluid Power segment, home to Eaton’s filtration operations, fourth quarter sales were US$1.2 billion, 17% above the 2006 equivalent. Excluding recent acquisitions, sales grew 11%.
10
Filtration Industry Analyst
“We had a good fourth quarter, with results above the high end of our guidance despite weakness in several of our end markets in the USA,” Alexander Cutler, Eaton’s chair and CEO, said. “We had a record 13.5% segment operating margin, with all segments earning well in excess of 12%. The balance of earnings in the quarter was attractive, with our Electrical and Fluid Power businesses representing over 70%of our overall segment operating earnings.” Looking forward, Cutler said Eaton expected overall revenue growth in 2008 to be around 4%. He said while US markets were only likely to increase by 2–3%, sales in international markets were likely to grow by 5–6%. ■ www.eaton.com
COMMENT Pall Corp has posted good results for the first quarter of fiscal 2008, with its sales up 12.4% on a year earlier at US$561 million and its EBIT 84.9% stronger at US$64.7 million. Like the previous quarter, however, the company has delayed reporting its net income figures as it undertakes an internal audit following tax inquiries from US authorities. “We maintained sales momentum with broad-based growth across both our Life Sciences and Industrial segments,” Eric Krasnoff, chair and CEO, said. “Strong systems sales were led by the municipal water market and also reflect continued customer demand for our Total Fluid Management capabilities.” In Pall’s Life Science’s segment, results for the company’s BioPharmaceuticals operations were the star performer with sales up 16.7% on a year earlier at US$104.4 million driven by strong systems sales in the Western Hemisphere and a double-digit increase in consumables sales in Europe. Overall the Life Sciences segment gross margin improved to 51.8% from 49.3% posted a year earlier, which the company
attributed to improved pricing and savings generated from ongoing continuous improvement efforts and its facilities rationalization program. Operating profit increased 36% to US$39.8 million. In Pall’s Industrial segment, sales growth was led by the General Industrial business unit that enjoyed a 19.2% increase on the year earlier quarter to reach US$208.7 million. Within the unit consumables sales increased in all markets, while revenues in the municipal water market almost doubled led by over 200% growth in systems sales in the Western Hemisphere. The Industrial segment’s Aerospace and Transportation division posted an overall sales growth of 9.8% on the2007 figure to reach US$66.3 million, with double-digit growth in commercial sales was partly offset by a reduction in military business. “Continued execution on our broad strategic initiatives is reflected in sales and operating profit improvement,” Krasnoff said. “We look forward to completing our restatement as soon as practicable following the Audit Committee’s inquiry into the tax matter”. ■ www.pall.com
March 2008