DOW JONES NEWSWIRES
Timken Co. (TKR) swung to a first-quarter loss as orders for its
bearings and specialty steel fell, showing why the company has been
cutting jobs and production to match slowing demand.
The company also warned it might not make money this year as it
halved its dividend and doubled its overhead cost-savings target to
$80 million.
"It's now clear that the impact of the recession on the demand
for our products will be deeper and longer lasting than we
anticipated," said President and Chief Executive James W. Griffith.
The company is acting "to structure the company for profitability,
even at current levels of demand." Job cuts are expected to reduce
the company's work force by more than 7,000 positions, or 25%,
since the beginning of 2008.
Timken now expects break-even results for 2009, plus or minus 15
cents a share. The company in January had projected earnings of
$1.30 to $1.60. Timken added capital spending will be
"significantly" below last year's level.
The company is suffering from an industrywide slump in steel
demand among its key buyers in the automotive, construction and
industrial equipment sectors. Before the dollar's rebound, Timken
was benefiting from shifting much of its sales overseas.
The company swung to a net loss of $5.1 million, or 1 cent a
share, from year-earlier net income of $85.4 million, or 88 cents a
share. Excluding items including severance costs in the latest
quarter, earnings fell to 7 cents a share from 82 cents.
Net sales plunged 33% to $960.4 million.
Analysts polled by Thomson Reuters were expecting a loss,
excluding items, of 2 cents a share on revenue of $1.08
billion.
Gross margin fell to 15.8% from 21.7%.
Shares closed Friday at $16.85 and were inactive premarket.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com;