Eaton earns $101 million on sales of $1.79 billion
CLEVELAND, OH...Eaton Corporation today announced first quarter 1997 sales of $1.79 billion compared to sales of $1.74 billion in the first quarter of 1996. Net income for the first quarter was $101 million, up 6 percent from last year's $95 million. Earnings per share for first quarter were $1.31, compared to $1.23 in 1996.
The company's comparative financial results:
Comparative Financial Summary Condensed Consolidated Balance Sheets Business Segment Information Statements of Consolidated Income Stephen R. Hardis, Chairman and Chief Executive Officer, said, "We are pleased with our first quarter performance. The results to date reinforce my confidence that Eaton is on track to achieve the aggressive goals we set for performance in 1997."
In Eaton's largest business segment, Electrical and Electronic Controls, Hardis said that activity continued firm outside of the slumping Semiconductor Equipment market and that operating performance was generally improved. Segment sales in the first quarter of 1997 reached $954 million, slightly below last year's first quarter record levels. Segment profits in the first quarter reached $70 million, 15 percent below last year's record.
Noted Hardis, "These results are especially encouraging considering the fact that, last year, our Semiconductor Equipment business was surging. A year ago, that business enjoyed consolidated first quarter sales of $130 million and-including the sales of our 50 / 50 joint venture Sumitomo Eaton Nova-total worldwide Semiconductor Equipment sales of $178 million. This year, consolidated sales are off more than $50 million and profits are down more than $25 million. Without the steep year-to-year decline in Semiconductor Equipment, Eaton's Electrical and Electronic Controls segment would have achieved another all-time record for sales and profits."
Specialty Controls sales were off 29 percent compared to one year ago because of the decline in Semiconductor Equipment sales. Observed Hardis, "Over time, this business demonstrates excellent growth and, because of our world leading position in ion implantation, it is a very attractive business for Eaton. But this extraordinarily dynamic market also requires a sustained commitment to R&D and new product development. Although that investment hurts today's operating results, it will ensure that we take full advantage of Eaton's leadership position in the years ahead." Hardis pointed out that R&D and new product spending in Semiconductor Equipment were up $3 million year-to-year despite the sharp downturn in sales. Said Hardis, "Like other industry participants, our new orders are up about 25 percent over the past six months and, assuming that trend continues, our sales should begin to show year-to-year gains during the second half of this year."
Hardis pointed out that first quarter sales of Industrial and Commercial Controls reached record levels, up nearly 6 percent compared to about a 3 percent year-to-year increase in markets served. Said Hardis, "We are continuing to enjoy strong nonresidential construction markets and modest gains in Cutler-Hammer's market position." Hardis also noted that first quarter sales of Automotive and Appliance Controls were up 4 percent versus a gain of about 2 percent in the North American and European production of these products.
In the Vehicle Components segment, Hardis said that operating results were sharply improved from recent quarters. First quarter 1997 segment sales reached $815 million, nearly 9 percent ahead of year-earlier sales, while segment profits were up 15 percent to $101 million. Noted Hardis, "We are beginning to benefit from the hard restructuring actions taken during 1996 and earlier. We are also pleased that CAPCO was in the black during this year's first quarter. The Truck Components team is doing an excellent job under difficult economic conditions. We can now begin to realize the full strategic potential of this key acquisition." CAPCO, a Brazilian light- and medium-duty transmission manufacturer, was purchased in the second quarter of 1996. Excluding the results of CAPCO, Vehicle Components segment sales in the first quarter were $783 million, 4 percent ahead of a year ago, with corresponding segment profits of $99 million, 13 percent above last year's results.
Hardis pointed out that sales of Eaton's Passenger Car Components were at record levels, 9 percent above a year ago, while North American and European production was up about 2 percent. "We continue to enjoy gains from new products, and we are beginning to participate in the growing Latin American markets." Sales of Off-Highway Vehicle Components were also at record levels, 12 percent ahead of last year and well above the 6 percent year-to-year growth in hydraulics industry shipments.
First quarter Truck Components sales reached $483 million, 8 percent ahead of one year ago. Excluding CAPCO, sales were up 4 percent while North American heavy truck production was down about 8 percent. Said Hardis, "Based on the strong industry orders trend we are seeing, our 1997 forecast for essentially flat North American factory sales of Class 8 trucks looks clearly achievable."
Summing up, Hardis noted "Our first quarter performance was not achieved by compromising Eaton's investments in the future. This year's results include about $7 million of increased spending on major programs designed to accelerate Eaton's sustainable growth in the years ahead."
"We are pleased with the performance of our businesses so far this year. The results reflect the exceptional efforts of 54,000 Eaton employees around the world."
Eaton Corporation is a global manufacturer of highly engineered products which serve industrial, vehicle, construction, commercial and aerospace markets. Principal products include electrical power distribution and control equipment, truck transmissions and axles, engine components, hydraulic products, ion implanters and a wide variety of controls. Headquartered in Cleveland, the company has 54,000 employees and 155 manufacturing sites in 26 countries around the world. Sales for 1996 were $7 billion.