Electrical Manufacturers’ 4th-Quarter Earnings Show Improvement

Fourth-quarter earnings reports are just coming in, and there are some indications of a stronger market. However, companies are looking for modest growth in 2004. Following is a sampling of financial statements from manufacturers.

Fastenal Co., Winona, Minn., added 45 new locations to its distribution network during the fourth quarter of 2003. Fastenal opened a total of 151 new stores in 2003, which represented 12.9 percent more stores since Dec. 31, 2002. On Dec. 31, 2003, the company operated 1,314 stores.

Fastenal said its fourth-quarter net income for the three-month period ended Dec. 31 rose to $19.9 million from $16.9 million a year ago. Sales rose to $251.6 million from $219.3 million a year ago.

The company said sales stabilized and improved during July through December due to the strengthening economy, following a choppy pattern in the first half of the year.

Hubbell Inc., Orange, Conn., saw a 4 percent increase in sales in the fourth quarter. Sales were $444.6 million, from $426.2 million a year ago. Net income for the fourth quarter 2003 was $34.7 million compared to $27.2 million reported for the equivalent period of 2002.

Hubbell’s electrical segment reported that sales rose 5 percent to $331 million, from $316.4 million a year ago, and operating profit rose 74 percent to $39 million, from $22.4 million a year ago including an $11.8 million pretax restructuring charge. Of special note were continued strength in residential and commercial fluorescent lighting fixture markets served by the Progress and Columbia brands, broad product lines marketed by Hubbell Canada, and harsh and hazardous application products sold by Chalmit based in Scotland.

“We expect the year ahead to be much like the year just past,” said Timothy H. Powers, Hubbell’s president and chief executive officer. “Our markets are likely to continue to be challenging, especially commercial construction and utility product markets, with only modest improvements in industrial product demand and a possible slowdown in residential activity after an unusually strong 2003.”

Eaton Corp., Cleveland, reported fourth-quarter net income of $114 million compared with $67 million a year earlier. Sales rose 17 percent to $2.08 billion from $1.78 billion.

Sales rose 27 percent in the electrical segment, to $612 million.

“The traditional mobile and industrial markets began to recover in the fourth quarter, reflecting the pickup in capital goods expenditures,”said Alexander M. Cutler, chairman and chief executive, in a prepared statement. “We anticipate that this recovery will gather steam during 2004, resulting in the first year of growth in these markets since 2000.”

Cooper Industries fourth-quarter profit up Cooper Industries Ltd., Houston, reported net income for the fourth quarter 2003 of $74.7 million. This compares with $27.8 million for the 2002 fourth quarter, which included a $29.8 million after-tax charge for restructuring costs.

Fourth-quarter 2003 revenues were up 6 percent to $1.04 billion, compared with $985.0 million for the fourth quarter 2002. Operating earnings were $81.0 million in the 2003 fourth quarter, compared with $57.0 million for the same period in 2002.

Revenues from the electrical products segment for the 2003 fourth quarter were $854.0 million, up 4.5 percent, compared with $817.5 million for the same period last year. Segment operating earnings for the fourth quarter 2003 were $94.0 million, compared with $72.1 million for the same period last year.

All of the company’s electrical products businesses grew revenues during the 2003 fourth quarter, except for the power transmission and distribution equipment business which continues to be challenged by weak utility markets. The balance of the company’s electrical products businesses achieved core revenue growth resulting from modest sequential economic improvement and the benefits of the company’s new product development and market penetration programs.

“...We enter 2004 with confidence,” said H. John Riley, chairman, president and chief executive officer. “We continue to see signs in our order book that an economic recovery is taking root. However, we recognize that some of these signs are fragile,” he said. “Consequently, we are continuing to operate on the assumption that we will see only modest top line growth in 2004.”