Timken releases first quarter 2003 results

The Timken Company (USA) reported first quarter 2003 sales and earnings, strongly driven by its six-week ownership of Torrington. A wide variety of one-time charges and credits were cited, along with the part-period Torrington ownership -- making comparisons to previous periods difficult. Sales in first quarter 2003 were USD $838 million, reflecting the addition of Torrington sales, strong automotive market demand, and gains from international currency effects. Net income was $11.3 million. Jim Griffith, President and CEO, said, "The integration of Torrington into Timken is proceeding as planned. With our sales forces consolidated, we soon expect to win our first major order that combines Timken and Torrington technology. We remain on track to achieve our expectations of having the Torrington acquisition be accretive to our full-year earnings by at least 10%. We continue to rationalize manufacturing operations to construct a global network of focused factories, with emphasis on increasing production in lower-cost locations. At the same time, we continue to push for more productivity increases in all of our facilities." Timken is rapidly executing its program to integrate Torrington while simultaneously cutting duplicate effort, personnel and facilities. By year end, Timken expects to achieve $20 million in annualized cost savings from the merger, with a target of $80 million by the end of 2005. The company cited key milestones in the first 60 days of absorbing Torrington: • the combined management team is in place • sales forces have been consolidated • the Darlington, UK facility is being closed • successfully leveraging vendors with its $1.6 billion in annual purchases Reorganization In addition to its ongoing worldwide manufacturing-oriented restructuring, Timken also has now reorganized its Automotive and Industrial Groups. The Automotive group was "significantly strengthened" by the Torrington acquisition. Timken said the combination of needle bearings and its existing tapered roller bearings provide many opportunities for innovation, particularly in powertrain applications. The Industrial Group product lines are similarly widened by the inclusion of Torrington, Fafnir, and Kilian product lines, said Timken. Distribution and manufacturing facilities are being rationalized. Automotive Group First Quarter First quarter sales for existing Timken business hit $211.2 million, up from $183.4 million in 2002. Torrington contributed $86.9 million in additional first quarter sales, for a total of $298.1 million. Although Torrington sales contributed strongly to overall results, Timken said the Group continues to be impacted by the ongoing restructuring and integration -- and the short-term inefficiencies that process necessarily creates. Industrial Group First Quarter First quarter sales for existing Timken business hit $243.0 million, up from $233.2 million in 2002. Torrington contributed $62.0 million in additional first quarter sales, for a total of $305.0 million. Timken said continued weakness across the world's manufacturing economy impacted sales but was offset by improved performance by its distribution business, favorable currency effects, and the impact of its manufacturing initiatives. Steel Group First Quarter First quarter sales were $275.8 million, up 16% from 238.4 million in 2002. The company said all market segments, except aerospace, were stronger than the weak first quarter of 2002. Results were helped along by modest price increases it was able to make stick in certain product lines, and from significantly improved labor productivity. However, the gains were more than offset by higher costs of raw materials, energy, and pension and benefit programs.