Companies Announce 2nd Quarter Earnings

Aug. 15, 2003
The second-quarter financial results for many electrical companies weren’t as horrendous as many of the numbers posted in recent quarters.

The second-quarter financial results for many electrical companies weren’t as horrendous as many of the numbers posted in recent quarters. Following are financial snapshots of the earnings reports of some key industry players.

Rexel CDME, the world’s largest electrical distributor, posted lower quarterly and first-half sales because of the strong euro. The company said profitability could improve by the second half of 2003.

Rexel, controlled by French retailer Pinault Printemps Redoute, generated sales of $1.86 billion in the second quarter, down 2.7 percent on a comparable basis from a year ago.

First-half sales were 3.33 billion euros, down 2.8 percent on a like-for-like basis and off 10.5 percent after a 299 million euro currency hit.

The euro’s strength against the U.S. and Canadian dollars has made foreign goods sold in those countries more expensive, denting sales in an already-sluggish economy. But cost cuts could lead to better operating profitability as soon as the second part of this year, Rexel said.

Rexel’s quarterly sales fell 3.3 percent in Europe, 2.7 percent in France, 2.2 percent in North America and 14.1 percent in Latin America compared with the year-ago period, Rexel said. Sales rose only in the Asia-Pacific region, gaining 1.9 percent.

Divestitures made in the first half of the year as well as Rexel’s successful capital increase would enable the company to profit from a business recovery, it said.

W.W. Grainger Inc., Chicago, said quarterly earnings rose about 3 percent, but sales for the second quarter were off from the same year-ago period.

The company, which operates more than 600 branches in the United States and Canada, said second-quarter net income was $56 million compared to $54.5 million in the prior quarter period.

Net sales fell 2 percent to $1.173 billion from $1.195 billion in the prior-year quarter. Sales performance in the second quarter of was affected by the continuing general weakness in the U.S. economy and lower seasonal sales due to unseasonably cool weather, the company said.

All customer segments were down except for government accounts, which were up 7 percent. National accounts were down 1 percent for the quarter.

WESCO International Inc., Pittsburgh, said that second-quarter profit rose due to a tax benefit, even as sales fell 3.3 percent. The company posted net income of $7.4 million compared with $5.6 million a year ago.

WESCO posted a $200,000 tax benefit in the quarter, compared with tax expense of $3.2 million a year ago.

Income from operations fell to $19 million from $21.6 million a year ago.

WESCO said net sales for the second quarter of 2003 were $820.2 million versus $848.4 million in 2002, a decline of 3.3 percent. Gross margins for the quarter improved to 18.4 percent versus 17.6 percent for the comparable 2002 quarter.

WESCO’s Chairman and Chief Executive Officer Roy W. Haley, said, “WESCO has held its position in a difficult market, and we are confident that we are well-positioned for growth and gains in operating results as economic activity improves.

“While we are optimistic in the long-term outlook for the markets we serve, we have yet to see consistent evidence of a reversal in the prolonged economic downturn that has adversely affected our industrial and contractor customer base. For the near term, our strategy will be to emphasize sales development programs and to achieve higher standards of service and productivity through implementation of lean enterprise initiatives in branch and headquarters operations.

“As a result of the focus being given to these programs by a large number of WESCO employees, we expect continued improvement in profitability and cash flow during the remainder of the year.” —Staff