Motion control products manufacturer Parker Hannifin Corporation completed its 2020 fiscal year on June 30, and on Aug. 6, the company reported its financial results for the fourth quarter of 2020 and the full year.
The company posted Q4 total sales of $3.16 billion, down 14.6 percent from Q3 and down 14.1 percent year-over-year (YoY), with organic sales down 21.1 percent YoY. That YoY organic decline was much steeper than in Q3's 7.4 percent decline. Total Q4 profit of $296 million was down from $367 million in Q3 and $414 million a year earlier. Q4 operating profit of $501 million and operating margin of 15.8 percent compared with $584 million and identical margin in Q3, and $641 million/17.4 percent of a year earlier.
The company said that Q4 orders were down 22 percent YoY, compared to a 2 percent decline in Q3.
"The improvement of Parker’s portfolio through transformative acquisitions, continued execution of The Win Strategy and near-term actions to reduce costs and preserve cash, have positioned us to achieve exceptional levels of performance during such a steep decline in demand," said Tom Williams, Parker Hannifin chairman and CEO.
Parker said it paid down $687 million of debt during its Q4, and $1.3 billion for the full fiscal year.
By business segment in Q4:
- Diversified Industrial North American sales of $1.44 billion decreased 17.5 percent YoY, with organic sales down 24.7 percent and orders down 29 percent. International sales of $1.1 billion were down 12.9 percent YoY, with organic sales down 15.4 percent and orders down 21 percent.
- Motion Systems sales of $699 million were down 19.6 percent YoY.
- Flow and Process Control sales of $827 million were down 25.6 percent YoY.
- Filtration and Engineered Material sales of $1.01 billion were down 1.1 percent YoY.
- Aerospace Systems sales of $624 million decreased 8.0 percent YoY, with organic sales down 22.3 percent and orders down 5 percent.
For the full year, Parker Hannifin's total fiscal 2020 sales of $13.7 billion were down 4.3 percent from 2019, while net profit of $1.21 billion fell 20.2 percent.
The company shared that it achieved total cost savings of about $200 million during Q4, comprised approximately 88 percent of temporary actions and 12 percent of permanent actions. It plans to shift that ratio to 55 percent permanent and 45 percent temporary in fiscal 2021, with goals of full-year savings of $450 million, depending on demand conditions.
"We expect that the global COVID-19 pandemic will continue to have a negative effect on economic activity in fiscal 2021," Williams added. "We will continue to manage our costs and preserve cash for the current environment and position ourselves for economic recovery."