The Timken Co. for the second time this year steeled investors for full-year sales and earnings in 2012 to be less than previous forecasts but called it a temporary dip and expects the economy to rebound in 2013.
Shareholders responded by boosting the stock price by more than 6 percent.
The Canton maker of bearings and specialty steel on Thursday reported lower third-quarter earnings and sales from a year ago but said that in light of a weak global economy it had a solid performance.
“Although sales were down, we generated strong operating margins and strong cash,” Jim Griffith, president and chief executive officer, told industry analysts. “Our earnings are far stronger at this point in the cycle than at any time in our history and we expect near record earnings for the full year 2012.”
Timken reported net income of $80.9 million, or 83 cents per share, on revenue of $1.1 billion for the third quarter.
Net income was down 27.1 percent from the $111 million, or $1.12 per share, for the third quarter a year ago. Revenue was down $175 million, or 14 percent, from $1.3 billion a year ago.
Sales rose 4 percent in North America but dropped 11 percent in Europe and were down 8 percent in Asia.
Shares of Timken rose $2.38, or 6.5 percent, to $38.99. Shares are up 2.2 percent, including dividends, since Jan. 1 and are down 2.1 percent from a year ago.
For the second time this year, Timken revised its earnings outlook for the year downward.
The company now said it expects to end 2012 with sales down 3 to 5 percent compared to 2011. Annual earnings will range from $4.75 to $4.95 per share, the company said.
In July, the company revised its earnings outlook downward to $5.00 to $5.30 a share because of expected weakness in its global markets.
Timken in April was more bullish on the year and had increased its 2012 earnings outlook to $6.10 to $6.40 per share.
The company is lowering its outlook based on expected lower shipments of its products to customers in many of its markets, Glenn Eisenberg, executive vice president and chief financial officer, told industry analysts.
“The general economy in the United States continues to improve but not at a pace fast enough to offset the impact of the global market,” Griffith said. “Our outlook for the remainder of 2012 is built on our expectation that the current combination of global market uncertainty and domestic inventory adjustment will continue at least through the end of the year. We share the view of many of our peers that this weakness in demand is a short-term adjustment. We expect to see a rebound in demand in 2013.”
Timken has reorganized and is a much stronger company than a few years ago and the third-quarter results reflect that, Griffith said.
For the first nine months of 2012, Timken had $3.9 billion in sales, slightly higher than the same period a year ago. Income was $420.2 million, or $4.28 a share, compared to $345.2 million, or $3.48 a share for the same period in 2011.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
