CANTON, OH — The Timken Co. has reported record sales of $1.3 billion in the first quarter of 2005, up 19 percent from a year ago, driven by strong industrial demand. Timken had record net income of $58.2 million, or 63 cents per diluted share, compared to $28.5 million, or 32 cents per diluted share, in the first quarter a year ago. Excluding special items, earnings per diluted share were 64 cents, compared to 31 cents last year. Special items in the first quarter of 2005 totaled $1.1 million of pretax expense, compared to $0.7 million of pretax income a year ago. The company’s tax rate for the quarter was 36 percent, compared to 38 percent in the same period a year ago, reflecting the benefit of tax planning strategies. The company said it expects the tax rate going forward to remain at 36 percent.
“We continued to see broad strength in industrial markets, leading the Industrial and Steel Groups to deliver solid earnings this quarter. The performance in these areas more than offset the results of the Automotive Group, which reflected the relative weakness of the North American automotive industry,” said James Griffith, president and CEO. “Over the past few years, we have taken actions to improve competitiveness in preparation for the upturn in global markets, and we are now benefiting from these actions. Overall, we are pleased with our first-quarter results and are continuing to focus on improving margins and performance.”
Total debt as of March 31, was $837.5 million, 39.1 percent of capital. Debt was higher than the 2004 year-end level of $779.3 million due to higher working capital requirements, resulting from increased sales volume and seasonality. During the quarter, Standard & Poors Ratings Services and Moody’s Investors Service improved their outlook on Timken debt from negative to stable and also reaffirmed their ratings of BBB- and Ba1, respectively. The company expects its leverage to be lower at the end of this year, compared to last year.
Automotive Group sales were $420.3 million, up 1 percent from $415.6 million in the first quarter of last year. The company said continued strong demand in the heavy truck market was nearly offset by a production decline in North American light vehicles. Sales also benefited from new platforms launched in 2004, such as the Nissan Titan and Pathfinder Armada and Ford F-150.
The Automotive Group recorded an EBIT loss of $5.1 million in the first quarter of 2005, compared to EBIT of $18.3 million last year. The loss was due primarily to higher raw material costs, which could not be completely offset due to contractual commitments with certain customers. However, the company is making progress in recovery of raw material cost increases. The Automotive Group’s results were also negatively impacted by lower volume in passenger car applications.
The company expects continued strong results in 2005 with estimated earnings per diluted share, excluding special items, of 55 cents to 60 cents for the second quarter and $2.05 to $2.20 for the full year. Continued strength of global industrial markets is expected to contribute to strong Industrial and Steel Group performance. North American light vehicle production is expected to be down slightly, while medium and heavy truck production is expected to remain strong. The Automotive Group should see improved profitability over last year as a result of productivity gains, price increases and surcharges.
For more information about Timken, go to: www.timken.com.
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