Bearings and power transmission solutions manufacturer Timken reported its 2020 fourth quarter and full-year 2020 financial results on Thursday, showing that sales have climbed back essentially to breakeven after major declines earlier in the year.
The North Canton, OH-based company posted Q4 total sales of $892 million, down 0.5 percent year-over-year (YoY). That follows a 2.1 percent YoY decline in Q3 and a whopping 20.1 percent plunge in Q2. Timken said the Q4 sales result was impacted by lower demand, partially offset by favorable impacts from acquisitions, currency translation and pricing.
Q4 gross profit of $237 million was down 8.0 percent YoY, while operating profit of $99 million improved 5.7 percent. Q4 total profit of $53 million was less than half of the $114 million from a year earlier and down from Q3's 89 million, while adjusted Q4 total profit of $65 million was slightly ahead of $64 million of a year earlier.
"Fourth-quarter revenue came in above our expectations, and we generated strong cash flow to finish out a solid year in a turbulent market environment," said Richard Kyle, Timken president and CEO. "Our full-year operating margin performance was very good despite the decline in revenue from the global pandemic."
By Timken business segment in Q4:
- Process Industries sales of $458 million increased 1.5 percent YoY, and decreased 1.7 percent from Q3. The YoY increase was driven by strong growth in renewable energy, higher marine revenue, the favorable impact of currency translation, positive pricing and the benefit of acquisitions, partially offset by lower revenue in distribution and other industrial sectors.
- Mobile Industries sales of $434 million decreased 2.6 percent YoY and increased 1.2 percent from Q3. The YoY decrease was driven by lower shipments in the rail, aerospace and automotive sectors, partially offset by growth in the off-highway and heavy truck sectors and the benefit of acquisitions.
For the full year, Timken's 2020 total sales of $3.51 billion were down 7.9 percent from 2019. Operating profit of $455 million was down 11.9 percent, while total profit of $285 million fell down 21.4 percent.
Looking forward, Timken expects 2021 revenue to be up approximately 12 percent at the midpoint of the year compared to 2020.
"We plan to deliver strong sales and earnings growth in 2021, driven by improving industrial markets, an active pipeline of new business wins and continued outgrowth in sectors like renewable energy and marine," Kyle said. "While we anticipate some near-term uncertainty and supply chain challenges related to the COVID-19 pandemic, we are seeing sequential strengthening in our business to start the year and we believe a sustainable industrial expansion is underway."
On Dec. 9, Timken announced more than $75 million in capital investments through early 2022 to increase the company's renewable energy capabilities across its global footprint. And on Dec. 1, Timken announced the acquisition of Aurora Bearing Company — a supplier of rod ends and spherical plain bearings based in Montgomery, IL.
