Cooper Industries Inc. Houston, reported revenues for the first quarter 2002 were $975 million, compared with $1.1 billion for the same period last year, a 11.4 percent decline. Operating earnings for the first quarter 2002 were down 20 percent, dropping to $88.4 million for its 2002 first fiscal quarter, compared with $111.9 million for the first quarter 2001. Net income for the 2002 first quarter was $48.8 million, compared with $56.4 million in the 2001 first quarter, a 15.5 percent decline. “The first quarter unfolded very much as we had expected,” said John Riley Jr., chairman, president and CEO. “We anticipated that the existing softness in the overall economy and in the specific markets we serve would linger well into 2002. However, we continued to exercise good discipline in managing all of our businesses. As a result, despite very difficult market conditions, we were able to modestly exceed our previously stated earnings projection for the quarter.
First quarter 2002 revenues for Cooper's Electrical Products segment were $819.5 million, compared with $910.0 million for the same period in 2001. Operating earnings in this year's first quarter were $91.8 million, compared with $102.6 million for the 2001 first quarter. “As expected, all of the company's Electrical Products businesses experienced lower demand relative to the first quarter of last year,” said Riley. “However, when compared to the fourth quarter 2001, overall segment revenues were flat, providing some indication that the steep market declines experienced throughout 2001 may, in fact, be moderating. Additionally, margins in our Electrical Products businesses held up reasonably well, reflecting the effectiveness of previously implemented cost-reduction programs.” Compared to the fourth quarter of last year, the company's lighting, circuit protection and European lighting and security businesses reported modest revenue increases. Sales to power delivery markets have held relatively constant over the last six months. However, revenues softened quarter-over-quarter in the company's other Electrical Products businesses, impacted primarily by diminished demand from the commercial construction sector and volatile oil and gas markets.
“The slowdown in the domestic economy, especially in the industrial and electronic sectors where factory utilization rates are hovering near 70 percent, affected sales of both hand and power tools,” said Riley. “As planned, we took aggressive actions during the quarter to curtail manufacturing operations in order to reduce inventories and to focus on cash generation. Earnings for the segment reflect the impact of both lower revenues and these actions.”
“Cooper's operating results for the first quarter of 2002 mirrored the prevailing weak market conditions,” said Riley. “However, we are seeing some encouraging signs that the economy may be on the verge of improvement. While product demand has not yet appreciably increased, we are encouraged that certain key economic indicators appear to be pointing to a recovery. For example, during the past three months, industrial production increased for the first time in almost 18 months and manufacturing employment levels have stabilized after declining throughout 2001. Additionally, construction activity forecasts remain positive, assuming interest rates stay low. Shipments of electronic components and telecommunications equipment also now appear to be stabilizing. While it likely will take some time for all of this to be reflected in the economy, we remain optimistic that these indicators will translate into a much stronger demand for our products in the third and fourth quarters of 2002.
“At this point, however, we anticipate that the difficult operating environment will continue well into the second quarter,” said Riley. “Our outlook for the second half of 2002 is much more positive. We continue to believe that the second half of the year will see a significant strengthening within our markets, particularly if overall construction activity remains strong and industrial production trends upward, as predicted. Our firmly established cost-reduction programs will allow us to realize substantial earnings improvement from this projected pickup in demand.”