This week was filled with distributors on ID's Big 50 List and industrial manufacturers reporting their most recent quarterly financial earnings, most of which had a common theme of sales and profit declines due to currency headwinds and the volatile oil & gas market. This week's most popular items included earnings news from Big 50 companies Grainger (No. 3), Motion Industries (10), Fastenal (12), and EIS Inc. (23).
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Here's this week's Top 5
Grainger Cuts Outlook, Branches As Q3 Profit Sinks: Grainger's Q3 posted a 13.4 percent profit drop to $199.3 million, leading the company to lower its 2015 full year outlook. Profit attributable to the company was $192.2 million, a 16.6 percent decrease year-over-year. In Q3, the company had total sales of $2.53 billion, down 1.2 percent from last year. Sales were essentially flat compared to Q2's $2.5 billion. The third quarter included charges of $11 million, reflecting cost actions begun in the third quarter related to the announcement of 26 branch closures in the U.S. and company restructuring, primarily related to payroll. Grainger also said it eliminated 170 field positions in the U.S., while in Canada, it cut 100 jobs and closed four branches since the start of June. On the flip side, Grainger said it added more than 100 sales reps in Q3 and has added 300 so far this year "to better serve and penetrate large customers." The company also said it has created a team to focus solely on its medium-sized business.
Q3 Sales Down At Motion Industries, Up At EIS: Reported Monday by its parent company – Genuine Parts Company – Motion Industries' Q3 sales were $1.17 billion, down 4 percent from last year's $1.22 billion. Operating profit for the quarter was $90 million, a 5.4 percent decrease. GPC said the decline had a 1 percentage point contribution from acquisitions, offset by a 1 percent negative effect from currency headwinds. At EIS – GPC's Electrical/Electronic Group – Q3 sales increased by 2 percent, including 5 percent growth from acquisitions, offset by a 1.5 percent decrease in core sales and 1.5 percent negative impact of copper pricing.
Jack Keough - Fastenal Weathering The Industrial Environment Recession: ID contributing editor Jack Keough examines Fastenal's Q3 financial report and conference call, in which new CEO Dan Florness commented on the overall state of the industrial distribution market. Florness said the industrial environment is in a recession, but Fastenal is still on pace to "easily exceed" its last three years of individual signings with new customers.
SKF Says More Cost Cuts Needed As Q3 Profit Slumps: Gothenburg, Sweden-based bearings manufacturer SKF recently reported its 2015 third quarter financial earnings, giving a gloomy outlook despite a sales increase. The company had sales of $2.2 billion in the period, a 3.3 percent increase over Q3 2014. Profit, meanwhile, decreased 12 percent to $218.8 million. SKF CEO Alrik Danielson said SKF has reached agreements with almost all of the 1,500 white-collar staff that is being cut as part of the company's cost-reduction program. Those cuts, however, aren't enough, as Danielson said, "Given current market conditions, these actions alone are, however, not sufficient and we will continue our cost reduction activities across the Group."
UPS To Hike Shipping Rates, Alter Fuel Surcharges: UPS is the latest parcel giant to announce rate increases for 2016. The Atlanta-based company announced this week that UPS Freight rates will increase by nearly 5 percent on average as of Oct. 26, while UPS Ground rates will jump by the same amount in late December. UPS Air and International services, including UPS Air Freight rates in the U.S., Canada and Puerto Rico, will increase by an average of 5.2 percent. In addition, the company's fuel surcharges and fees for oversized packages will change in early November, while its third-party billing service will charge customers starting in early 2016. UPS officials attributed the changes to increased costs, demand changes and other market factors.