- Email: [email protected]
General Electric Co, USA
April 2005
Filtration Industry Analyst
Clarcor Inc, USA
General Electric Co, USA Key Figures (US$ million) First quarter ended 31.3
2005
2004
Net Sales Of Which: Engine/Mobile Filtration Industrial/Environmental Filtration
196.3
175.3
83.1
70.8
97.2
89.0
Cost of Sales
139.2
123.8
Gross Profit
57.0
51.5
Operating Profit Of Which: Engine/Mobile Filtration Industrial/Environmental Filtration
21.1
17.8
16.8
14.4
4.0
3.3
Net Earnings
13.2
11.7
COMMENT Clarcor has reported first quarter sales of US$196.3 million, up US$21 million (12%) on 2004. Quarterly operating profit increased by 18% and net earnings by 13% compared with a year earlier. Norm Johnson, Clarcor’s chairman and chief executive officer (CEO), said revenue growth was helped by the acquisition of Purolator EFP in September 2004, which contributed US$6 million in sales to the quarter. But even without Purolator EFP – and a smaller acquisition made earlier in 2004 – “internal sales growth would still have been above 7% for the quarter,” he said. “Operating margins continue to improve, from 10.2% in 2004 to 10.7% in 2005. Engine/Mobile segment margins were level with last year at over 20% and our two other segments, Industrial/Environmental and Packaging, both improved.” Engine/Mobile segment sales increased by 17%, mainly driven by growth in heavyduty filter sales through the
company’s traditional distribution routes, as well as to truck fleets. “We saw significant growth in filter sales to OEMs and, particularly, OEM dealers,” Johnson said. Internationally, Engine/Mobile segment sales were also strong throughout Europe and Asia. “We are also seeing continued sales growth for our dust collector cartridges.” Industrial/Environmental segment sales, including Purolator EFP, grew by 9%, although growth and profitability in this segment was very uneven across different markets. Sales of filtration equipment, such as dust collectors, and sales of filters for oil and gas drilling, aerospace and process applications were consistently good for all of the first quarter. “Sales for HVAC applications, both residential and commercial, continue to be weak and below our expectations...but Purolator EFP is performing exceptionally well with operating profits significantly above what we expected,” Johnson said. ■
2005
2004
Revenues Of Which: Healthcare Infrastructure
39 811
33 350
3321 965
2495 776
Costs and Expenses
34 583
29 128
Segment Profit Of Which: Healthcare Infrastructure
5392
4298
409 147
339 113
Net Earnings
4043
3240
COMMENT GE has posted record firstquarter earnings of US$4.0 billion, up 25% from US$3.2 billion in the first quarter of 2004, on revenue growth of 19%. Nine of the company’s 11 business segments, including its Healthcare and Infrastructure sectors – that contain the bulk of its filtration and related enterprises – contributed at least doubledigit earnings growth. GE’s chairman and chief executive officer (CEO), Jeff Immelt, said, “our portfolio changes have created a faster-growth company, and the moves we made in the last two years are paying off in excellent performance, particularly at Healthcare, NBC Universal and Infrastructure.” Revenues from growth initiatives in services and from new platforms, such as security and water, grew 15% and 9% respectively, and global revenues increased 33%. GE’s Infrastructure segment enjoyed a strong quarter, with revenues up 24% to US$965 million, and profit climbing 30% to US$147
million on year-earlier figures. The quarter also saw the unit complete the acquisition of Ionics, as well as that of Edwards Systems Technology, a global leader in fire and life safety security systems. In addition, GE completed its first major water project in the Middle East with the opening – in partnership with Mohammed Abdulmohsin Al-Kharafi & Sons Co and the Kuwaiti government – of the world’s largest membrane-based water filtration system. The facility will purify more than one million gallons of wastewater each day for agricultural and industrial use. GE’s Healthcare segment also had a strong quarter. It saw total orders increase 45%, compared with first quarter 2004, to US$3.5 billion. This growth was driven by several factors; a 10% increase in services revenues – to US$1.3 billion; a 19% lift in equipment sales – to US$1.5 billion; and a US$0.7 billion contribution from its Biosciences business. ■
11
COMPANY WATCH
Key Figures (US$ million) First quarter ended 26.2.05 (28.02.04)
Filtration Industry Analyst
Clarcor Inc, USA
General Electric Co, USA Key Figures (US$ million) First quarter ended 31.3
2005
2004
Net Sales Of Which: Engine/Mobile Filtration Industrial/Environmental Filtration
196.3
175.3
83.1
70.8
97.2
89.0
Cost of Sales
139.2
123.8
Gross Profit
57.0
51.5
Operating Profit Of Which: Engine/Mobile Filtration Industrial/Environmental Filtration
21.1
17.8
16.8
14.4
4.0
3.3
Net Earnings
13.2
11.7
COMMENT Clarcor has reported first quarter sales of US$196.3 million, up US$21 million (12%) on 2004. Quarterly operating profit increased by 18% and net earnings by 13% compared with a year earlier. Norm Johnson, Clarcor’s chairman and chief executive officer (CEO), said revenue growth was helped by the acquisition of Purolator EFP in September 2004, which contributed US$6 million in sales to the quarter. But even without Purolator EFP – and a smaller acquisition made earlier in 2004 – “internal sales growth would still have been above 7% for the quarter,” he said. “Operating margins continue to improve, from 10.2% in 2004 to 10.7% in 2005. Engine/Mobile segment margins were level with last year at over 20% and our two other segments, Industrial/Environmental and Packaging, both improved.” Engine/Mobile segment sales increased by 17%, mainly driven by growth in heavyduty filter sales through the
company’s traditional distribution routes, as well as to truck fleets. “We saw significant growth in filter sales to OEMs and, particularly, OEM dealers,” Johnson said. Internationally, Engine/Mobile segment sales were also strong throughout Europe and Asia. “We are also seeing continued sales growth for our dust collector cartridges.” Industrial/Environmental segment sales, including Purolator EFP, grew by 9%, although growth and profitability in this segment was very uneven across different markets. Sales of filtration equipment, such as dust collectors, and sales of filters for oil and gas drilling, aerospace and process applications were consistently good for all of the first quarter. “Sales for HVAC applications, both residential and commercial, continue to be weak and below our expectations...but Purolator EFP is performing exceptionally well with operating profits significantly above what we expected,” Johnson said. ■
2005
2004
Revenues Of Which: Healthcare Infrastructure
39 811
33 350
3321 965
2495 776
Costs and Expenses
34 583
29 128
Segment Profit Of Which: Healthcare Infrastructure
5392
4298
409 147
339 113
Net Earnings
4043
3240
COMMENT GE has posted record firstquarter earnings of US$4.0 billion, up 25% from US$3.2 billion in the first quarter of 2004, on revenue growth of 19%. Nine of the company’s 11 business segments, including its Healthcare and Infrastructure sectors – that contain the bulk of its filtration and related enterprises – contributed at least doubledigit earnings growth. GE’s chairman and chief executive officer (CEO), Jeff Immelt, said, “our portfolio changes have created a faster-growth company, and the moves we made in the last two years are paying off in excellent performance, particularly at Healthcare, NBC Universal and Infrastructure.” Revenues from growth initiatives in services and from new platforms, such as security and water, grew 15% and 9% respectively, and global revenues increased 33%. GE’s Infrastructure segment enjoyed a strong quarter, with revenues up 24% to US$965 million, and profit climbing 30% to US$147
million on year-earlier figures. The quarter also saw the unit complete the acquisition of Ionics, as well as that of Edwards Systems Technology, a global leader in fire and life safety security systems. In addition, GE completed its first major water project in the Middle East with the opening – in partnership with Mohammed Abdulmohsin Al-Kharafi & Sons Co and the Kuwaiti government – of the world’s largest membrane-based water filtration system. The facility will purify more than one million gallons of wastewater each day for agricultural and industrial use. GE’s Healthcare segment also had a strong quarter. It saw total orders increase 45%, compared with first quarter 2004, to US$3.5 billion. This growth was driven by several factors; a 10% increase in services revenues – to US$1.3 billion; a 19% lift in equipment sales – to US$1.5 billion; and a US$0.7 billion contribution from its Biosciences business. ■
11
COMPANY WATCH
Key Figures (US$ million) First quarter ended 26.2.05 (28.02.04)