A fresh batch of 2Q 2012 earnings reports offers some insight into current economic conditions and what CEOs of some of the largest publicly owned electrical manufacturers and distributors of electrical supplies see for the next few months. Overall, 2Q 2012 sales for electrical companies were fairly solid, but several executives agreed that the economy has slowed down a bit at mid-year. Despite the current soft patch, several industry executives said in comments accompanying their earnings reports that for the full year, they still expect solid if not spectacular growth. Here’s a glimpse of what several companies reported in their recently released earnings reports.
W.W. Grainger Inc., Lake Forest, Ill., reported record results for its 2012 second quarter, with sales of $2.2 billion up 12 percent over the same time period in 2011. For the six months ended June 30, Grainger’s 2012 sales of $4.4 billion represented a 14% increase over the same period in 2011.
“We are confident that our investments in expanding our product offering, enhancing our eCommerce platform, increasing our sales force and growing our inventory management solutions, provide value to our customers,” Jim Ryan, the company’s chairman, president and CEO said in a press release, “As such, we reiterate our 2012 sales guidance of 12%-14% growth.”
One of its competitors in the electrical market, WESCO International, Pittsburgh, Pa., also reported strong 2Q 2012 sales, with an increase over 2Q 2011 sales of 9.7% in its industrial, construction, utility and CIG (commercial, institutional & government) end-user markets. Consolidated net sales for the first six months of 2012 for WESCO were $3.28 billion, an increase of 10.9% for the same period compared to 2011.
John Engel, WESCO’s chairman and CEO, said, “Our long-term outlook remains unchanged, as we expect the economy to continue to recover slowly over the next several years. We are continuing to invest in our eight growth engines and our six operational excellence initiatives, and we remain focused on executing our One WESCO strategy of providing customers with the leading products, services and supply chain solutions they need to meet their MRO, OEM, and capital project requirements around the world.”
On the manufacturing side, several companies reported decent growth in 2Q 2012. While Eaton Corp., Cleveland, said its second-quarter sales were a record, the company saw its sales increase tamped down a bit by some struggling overseas markets. Second-quarter sales for Eaton’s Electrical Americas segment were $1.1 billion, up 10 percent compared to 2011 — a quarterly record for the segment. Eaton’s sales for its Electrical Rest of World segment were $683 million, a decrease of 13% percent compared to the second quarter of 2011.
In a press release, Sandy Cutler, the company’s chairman and CEO, said, “The uncertainty in Europe, as well as slower economic growth rates in China, India and Brazil, resulted in weakness in a number of our end markets. We now believe our end markets for the year are likely to grow by 3%-4%, a reduction from the 5% growth we had forecast in April. Overall, we continue to expect 2012 to be a year of record sales and record profits. Our sales are projected to be 4% above 2011.”
Cooper Industries, Houston, which was acquired by Eaton earlier this year, also reported steady growth for the quarter. Its core growth in the U.S. and Canada was up 6%, reflecting growth trends in its industrial and utility end markets. The company’s North American lighting business grew in the mid-single digit range, spurred on by continued adoption of LEDs and demand for energy efficient products.
Revenues for the company’s Electrical Products segment in 2Q 2012 increased 9.4% to $676.1 million, compared with $617.8 million in the second quarter 2011. Core revenues were 4.2% higher than prior year, with acquisitions adding 6.2% and currency translation decreasing reported results by 1%. Core revenue growth was driven by industrial and commercial products for large energy projects and continued robust demand for energy efficiency. The growth was somewhat muted by continued weakness in commercial and residential construction.
Hubbell Inc., Orange, Conn., had a very strong second quarter, with a 10% increase led by its electrical products and utility businesses. Timothy Powers, chairman and CEO, said in a press release, “Looking at our end markets, utility demand was strong led by higher spending for transmission related projects while distribution demand also increased. On the industrial side, higher overall demand was primarily due to strength in the energy-related industries.
“Our businesses tied to industrial production grew more modestly while high-voltage test equipment was weaker. The U.S. non-residential new construction market remains somewhat mixed with improving conditions on the private side while public spending continues to decline. However, we are continuing to benefit from strong demand for renovation and relight projects. The residential market also improved, driven by increased demand in the multi-family housing area.
“Based on our first-half results and leading market indicators, we expect net sales to increase by 6%-8% for the year with the bias being to the high end of the range. Turning to the non-residential construction market, we do not expect any meaningful improvement in demand for new construction. However, we expect continued stronger demand in areas such as renovation and relight activity to allow us to grow within this market. We have increased our outlook for the residential market due to the strength of multi-family housing demand. The one end market where we have lowered our forecast slightly is in the industrial sector.”