3rd-Quarter Earnings Show Improvement

Oct. 24, 2003
Several electrical companies reported an increase in third-quarter financial results. Following are financial snapshots of the earnings reports of some industry players.

Several electrical companies reported an increase in third-quarter financial results. Following are financial snapshots of the earnings reports of some industry players.

3M, St. Paul, Minn., reported a 21.6 percent gain in third-quarter net income to $663 million compared with $545 million in the same period last year.

Third-quarter worldwide sales rose 11.4 percent to $4.6 billion from $4.1 billion a year earlier. Within the United States, sales rose 3.7 percent to $1.99 billion. International sales increased 18 percent to $2.63 billion. Sales-volume gains were strongest in the Asia-Pacific area, up 22.3 percent, and Latin America, up 21.2 percent.

Despite 3M’s strong international sales gains during the third quarter, the company said it does not see any evidence of a turnaround in the U.S. manufacturing economy.

3M saw strong sales growth throughout most of its business segments, with the largest increase in display and graphics. Sales in that division increased 35 percent to $772 million. Meanwhile, sales in health care rose 12 percent to $1.01 billion.

According to a Dow Jones report, Patrick D. Campbell, 3M’s chief financial officer, told analysts during a conference call related to the company’s third-quarter earnings report that the company “remains very cautious” in its planning for 2004. He said a quick, broad-based recovery probably isn’t in the cards anytime soon.

Eaton Corp., Cleveland, reported third-quarter net income of $107 million, compared with $93 million, a year before.

Sales rose 11 percent to $2.03 billion from $1.83 billion.

In the electrical segment (formerly the Industrial & Commercial Controls segment), third quarter sales were $612 million, up 21 percent from last year. Excluding the impact of the Delta and Commonwealth Sprague Capacitor acquisitions and the new joint venture formed with Caterpillar, third quarter sales were up 2 percent compared to 2002. Operating profits in the third quarter were $49 million. Operating profits before restructuring charges were $54 million, up 10 percent from results one year ago.

“End markets for our electrical business remained weak during the third quarter, with an estimated 3 percent decline in the markets for this business compared to last year,” said Alexander M. Cutler. Eaton chairman and CEO. “We expect that the overall electrical markets will remain flat for the balance of 2003, with modest growth expected to resume in the first half of next year.

“The profitability of our base electrical business has improved significantly, and the integration of the electrical division of Delta, which we purchased at the end of January, continues on plan,” said Cutler. “Even so, the Delta acquisition reduced the electrical segment’s operating margins for the quarter by slightly less than two percentage points.

Littelfuse Inc., Des Plaines, Ill., reported sales for the third quarter of 2003 of $94.7 million, a 26 percent increase from sales of $75.0 million for the same period of 2002. Teccor Electronics, which was acquired in July 2003, contributed $19.9 million in sales for the quarter.

For the first nine months of 2003, sales were $237.5 million, up 11 percent compared to the prior year period.

By geographic segment, sales for the third quarter of 2003 were up 16 percent in the Americas, 19 percent in Europe and 50 percent in Asia, compared to the prior year. These increases were driven by the addition of Teccor and continued strength in the Asian electronic markets.

Excluding the Teccor acquisition, sales for the third quarter were flat compared to the prior year period. Electronic sales were up 4 percent for the quarter; automotive and electrical sales were down 6 percent and 4 percent respectively.

Phil Franklin, Littelfuse’s vice president, operations support and chief financial officer, said that with the shutdown of the Centralia, Ill., plant in the third quarter, the company has completed its manufacturing rationalization program, which has been underway for two years. Over the next six to 12 months, the company expects to announce additional programs with a goal to achieve over $20 million of savings in 2004, he said.