Companies Report Solid First-Quarter Earnings; Forecast Decent Growth For 2007

April 27, 2007
Several electrical companies reported solid first-quarter financial results. Following are financial snapshots of the earnings reports of some industry players

Several electrical companies reported solid first-quarter financial results. Following are financial snapshots of the earnings reports of some industry players.

Anixter International Inc., Skokie, Ill., said its first-quarter profit rose 71 percent, partly due to higher copper prices.

Earnings grew to $53.6 million compared with $31.3 million in the year-ago period. Quarterly revenue climbed 24 percent to $1.33 billion versus $1.07 billion in the previous year.

President and Chief Executive Robert Grubbs said in a statement that the company saw strong project business from energy and data center customers, growth in security and original equipment manufacturer markets and higher copper prices.

“We estimate that the higher copper prices accounted for approximately $35 million of our year-on-year quarterly increase in sales within the electrical wire and cable market,” Grubbs said. Anixter said it also experienced a favorable foreign exchange impact of $25.9 million on sales in its current quarter.

Grubbs says 2007 is off to a good start as most of the same underlying trends that generated record performance in 2006 continue to drive the business. “If the underlying market fundamentals remain healthy and we continue to make solid progress on our strategic initiatives to build our security and OEM business, add to our supply chain services offering, expand the geographic presence of our electrical wire and cable business, and expand our product offering, 2007 has the potential to be another very strong year,” he said.

Rexel Inc., Paris, said its global first-quarter sales worldwide rose 31 percent to $3.5 billion from the same period last year.

Rexel saw double-digit organic growth in Europe and Asia-Pacific, with flat sales in North America.

Rexel CEO Jean-Charles Pauze said Rexel’s balanced footprint allowed the group to post solid revenue growth in the first quarter. Rexel saw a slowdown in North America in line with the trend previously announced in the fourth quarter of 2006, he said. Rexel, which became a publicly listed company earlier this month, is in a strong position to deliver profitable growth and consolidate its worldwide leadership in the distribution of electrical supplies, he said.

Rexel’s sales in the United States grew 1.1 percent. The West Coast, Florida and Mid-Atlantic regions, where Rexel has higher exposure to residential activity, were hit by the decline of residential and related commercial construction projects. The South Central and Southern regions, where industrial activity is stronger than construction, continued to fuel organic growth. Industrial and automation equipment posted growth of 4 percent for the quarter. At GE Supply, the first quarter 2006 base of comparison was particularly high due to significant Katrina reconstruction business. Adjusting for the Katrina effect, the comparable year-on-year growth figure for the U.S. would have been approximately 1 percent. Canada saw growth of 2.5 percent in the first quarter. In Europe, growth was 11.4 percent in France, 7.4 percent in the UK, 10.1 percent in Germany, and 12.9 percent in the rest of Europe. In Asia, growth was 84.8 percent. Australia had growth of 9.8 percent. Acquisitions added $743.9 million in sales in 2006.

Encore Wire Corp., McKinney, Texas, reported net income for the quarter ended March 31 of $6.4 million. That’s down from net income of $16.1 million in 2006’s first quarter.

Net sales for the quarter were up 3 percent to $260.7 million from $252 million in the year-ago period. Higher prices for building wire sold in 2007, driven by higher copper costs, accounted for the increase in net sales dollars versus 2006.

Daniel L. Jones, president and chief executive officer of Encore Wire Corp., said, “We are pleased to announce a profitable quarter in the midst of the tough competitive environment we are currently facing in our industry. The margin compression we experienced in the fourth quarter of 2006 continued into the first quarter of 2007.”

He said some competitors cut their wire prices to maintain market share in response to the much-publicized slowdown in residential construction. He said the company’s total unit volume measured in copper pounds shipped was down 9.7 percent in the first quarter of 2007 versus the first quarter of 2006. “We will focus on our industry leading order-fill rates and our exceptional new product offerings in commercial wire and new armored cable line,” Jones said.

Thomas & Betts Corp., Memphis, Tenn., reported first-quarter earnings of $37.1 million, including pre-tax expenses of 8 cents a share related to a legal settlement. This compares to net earnings of $38.8 million in the first quarter 2006.

Net sales rose 7.4 percent to $474.6 million in the first quarter, compared to $441.8 million in the prior-year period. Price increases to offset higher material and energy costs and volume improvements contributed to the sales increase.

2007 started out strong,” said Dominic J. Pileggi, chairman and chief executive officer. “Demand remains positive in industrial and utility markets and is beginning to strengthen in commercial construction markets.”

Electrical segment sales were $389.2 million in the first quarter, up 8.8 percent compared to the first quarter 2006. Higher selling prices driven by higher material and energy costs contributed significantly to the sales growth. Solid demand in industrial, commercial construction and utility distribution markets also contributed to the sales improvement. Electrical segment earnings were $64.9 million in the quarter, up 11.4 percent compared to the first-quarter 2006.