The Canton, Ohio-based Timken Company, a global manufacturer of bearings, alloy steel, and power transmission components, reported sales of $1.1 billion in Q3 2010 Thursday, an increase of 39 percent over the same period a year ago. The sales increase reflects stronger global demand across most of the company's end markets and higher material surcharges.
The company generated income from continuing operations in the third quarter of $71.4 million compared with last year's Q3 loss of $19.4 million. Excluding special items, the company posted $78.1 million in income from continuing operations, compared with income of $7.4 million in Q3 2009.
The increase in Q3 earnings reflects the combined effects of stronger demand, greater manufacturing efficiencies, surcharges, and pricing, partially offset by higher material and selling and administrative costs.
"The company's strong profitability and cash flow demonstrate a structural improvement in our level of performance," said James W. Griffith, Timken president and CEO. "We are growing the company in global markets where we create value, and are well positioned to accelerate that growth."
As of Sept. 30, 2010, total debt was $493 million, or 21.6 percent of capital. The company had cash of $900 million, or $407 million in excess of total debt, compared with a net cash position of $243 million as of December 31, 2009. The increase in net cash reflects strong cash flow from earnings, partially offset by pension contributions and working-capital requirements.
During the company's quarterly conference call, Timken announced a $50-million product-finishing investment in its Ohio steel operations, expected to increase efficiency when completed in 2013, and discussed their excitement about their recently opened office in Jakarta, Indonesia, to serve growing demand from the metals, mining, cement, rail, energy and power industries.
For the first nine months of 2010, sales were $3 billion, an increase of 26 percent from the same period in 2009. Income from the company's continuing operations, for the first nine months of 2010 was $181.1 million compared with a loss of $53.9 million, a year ago.
Sales for the Steel Group, including inter-group sales, were $371.3 million in Q3, an increase of 135 percent from $157.9 million year-over-year, and raw-material surcharges increased approximately $80 million from Q3 last year.
For the first nine months of 2010, Steel Group sales were $979.7 million, up 81 percent from the first nine months of last year.
Looking forward, Timken expects the Steel Group sales to increase 80 to 90 percent, due to improved demand across all market sectors as well as surcharges.