Motion control products manufacturer Parker Hannifin Corporation reported its 2020 third quarter financial results on Thursday, also detailing cost-savings measures enacted in response to mitigate impacts from the COVID-19 pandemic.
The Cleveland, OH-based company posted total Q3 sales of $3.7 billion, essentially flat compared to $3.69 billion a year earlier, while organic sales fell 7.4 percent year-over-year (YoY). Parker’s total Q3 profit was $367 million, compared to $411 million a year earlier.
By business segment in Q3:
- Diversified Industrial North American sales increased 1 percent YoY to $1.8 billion, with operating profit of $280 million down slightly from $288 million a year earlier. International sales decreased 8 percent YoY to $1.2 billion, with operating profit of $177 million down from $209 million a year earlier.
- Aerospace sales increased 14 percent YoY to $745 million, with operating profit of $127 million down from $135 million a year earlier.
Parker said total company orders decreased 2 percent YoY, down 7 percent in Diversified Industrial North America; Down 2 percent in Diversified Industrial International; and up 12 percent in Aerospace.
“We expect that the months ahead will be much more challenging as April order trends have become more negative with the current global economy,” said Tom Williams, Parker chairman and CEO. “As a result, we have been comprehensive in taking immediate cost reduction and cash preservation actions that include global salary reductions and reduced work schedules, a global hiring freeze, deferral of annual merit increases, targeted restructuring, elimination of discretionary spending, optimizing working capital and reducing capital expenditures, all of which will help us mitigate the financial impact of a drop off in demand.”
Part of those cost reduction actions include Williams taking a 50 percent salary reduction during the company’s Q4 that began April 1. Parker’s other officers will take salary cuts of 20 to 30 percent, other salaried team members and directors will take a 10 percent reduction.
The company also said it is enacting reductions in its total workforce to the amount of $25 million to $30 million in savings, part of an overall plan to create $275 million to $330 million in savings in Q4.
The company said it will evaluate whether these cost savings measures will be extended into its 2021 Q1.