The Timken Co. doesn’t expect to sell as much in 2013 as it did in 2012.
The Canton steel and bearings maker on Thursday said it anticipates lower demand will cause sales to drop 5 percent this fiscal year from 2012’s nearly $5 billion in revenue, which in turn was down 4 percent from 2011 revenue.
The economy and sales are expected to pick up in the last six months of this year, Timken’s top executive said in its outlook as part of announcing results for the fourth quarter and fiscal 2012.
“We expect to deliver solid operating results in 2013 as we continue to take actions to reduce costs and drive efficiencies in response to the environment,” James Griffith, president and chief executive officer, said in a news release. “Our outlook for the year reflects our expectation that we will continue to see inventory reduction by our customers in the first half of the year, and anticipate an improving economy in the second half with customer demand matching consumption.”
Timken shares rose 86 cents, or 1.7 percent, to $52.35 on Thursday. Shares are up 9.5 percent, including dividends, since Jan. 1 and are up 11.9 percent from a year ago.
Timken reported earning $495.5 million, or $5.07 a share, on revenue of $4.99 billion for the year. That compares to net income of $454.3 million, or $4.59 a share, on revenue of nearly $5.2 billion in 2011.
For the fourth quarter of 2012, net income and earnings were well down from a year ago. Timken reported net income of $75.3 million, or 78 cents per share, on revenue of $1.08 billion. Net income was down about 31 percent from $109 million, or $1.11 a share on $1.26 billion in income a year ago. Sales were down 15 percent from a year ago.
The fourth quarter ended pretty much as company executives expected, Griffith said in a statement to industry analysts.
Timken said the lower sales totals were primarily due to lower demand in the light vehicle, heavy truck, mining and energy-related markets, plus lower surcharges.
For the full year, Timken performed strongly, Griffith said. When one-time items are factored, “this stands as the second best year in our company’s history,” he said.
The company is continuing with its $225 million upgrade at its Faircrest steel plant and has a new tubing finishing line and a new forge press starting up shortly, Griffith said.
The company responded quickly and effectively to slowing demand, he said.
“Overall, we believe the demand for our products bottomed in the fourth quarter, based on market indicators, our current order book and input from customers,” Griffith said. “We expect shipments in 2013 to ramp up slowly in the first half of the year.”
Timken customers particularly in the energy and mining markets “overbuilt” for 2011 and early 2012 and now are working to reduce inventories of finished goods, Griffith said.
For all of 2013, Timken expects to earn between $3.75 and $4.05 a share, said Glenn Eisenberg, chief financial officer.
The company also expects to put about $300 million into its pension fund this year, leaving it essentially fully funded by the end of 2013, Eisenberg said. With no pension contributions expected to be needed in 2014, that will then free up cash the company will be able to use elsewhere, Griffith said.
“We’re a stronger company today than we were just even a few years ago,” Griffith said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.