Latrobe, PA-based Kennametal, a manufacturer of innovative wear-resistant products, application engineering and services backed by advanced material science, reported its 2015 second quarter earnings on Thursday, highlighted by an operating loss of $334 million.
Sales for the quarter declined to $675.63 million from $689.94 million in the same quarter last year. Wall Street expected revenues of $703.28 million. Excluding items, adjusted net income for the quarter was $41.36 million, compared to $40.12 million in the year-ago quarter.
Looking ahead, Kennametal revised its outlook for fiscal 2015 to reflect a weaker economic environment for the remainder of the fiscal year. The company now expects total sales to decline in the range of 6 to 7 percent and organic sales to decline in the range of 4 to 5 percent. Previously, total sales growth was projected to be in the range of 2 to 4 percent, with organic sales growth of 1 to 3 percent.
"While the current weakness in our end markets adversely affected our results, and the nature and magnitude of the impairment charge is disappointing, they also illustrate many opportunities for improving our operations and business portfolio," stated President and CEO Don Nolan. “As attractive as our future may be, Kennametal also faces some serious challenges given that we have underperformed and missed investor expectations. It’s clear we have some immediate work to do to deliver better performance by driving organic sales growth, getting our portfolio right and aligning our cost structure accordingly."
Nolan said current efforts to restructure the company’s tungsten materials business will generate $50 million to $55 million in savings, and that a new restructuring initiative will generate annual savings of $40 million to $50 million. Nolan also announced plans to reduce the company's manufacturing footprint and administrative overhead with a new restructuring initiative.
