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News

Parker Hannifin - Third Quarter Fiscal Year 2007 Results


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Parker Hannifin
: 24 April, 2007  (New Product)
Parker Hannifin Corporation today reported third quarter fiscal year 2007 results. The company set new quarterly records for sales and earnings per diluted share from continuing operations. Sales for the third quarter of fiscal year 2007 were $2.8 billion, up 11.3 percent, as compared to sales of $2.5 billion from the same period last year. Earnings per diluted share from continuing operations in the third quarter of fiscal year 2007 was $1.78, an increase of 21.9 percent over the $1.46 posted in the same period a year ago. This quarter's earnings per diluted share included a gain of 5 cents from the sale of real estate.
'By executing our Win Strategy, our employees delivered another record quarter,' said Chairman, CEO and President Don Washkewicz. 'Their continued performance gives us confidence that fiscal year 2007 will end on a very positive note.'

Third Quarter Segment Results

In the Industrial North American segment, third quarter operating income decreased 10.8 percent from the prior year to $146.8 million, on sales of $1.0 billion.

In the Industrial International segment, third quarter operating income increased 42.0 percent over the prior year to $140.5 million, on sales of $1.0 billion.

In the Aerospace segment, third quarter operating income increased 21.6 percent over the prior year to $66.2 million, on sales of $436.5 million.

In the Climate & Industrial Controls segment, third quarter operating income decreased 19.0 percent from the prior year to $19.2 million, on sales of $278.1 million.

Total operating margin across all segments in the third quarter was 13.4 percent versus 13.7 percent in the same period a year ago.

Fiscal Year to Date Results

For the first nine months of fiscal year 2007, sales were $7.8 billion, up 15.9 percent, as compared to sales of $6.8 billion from the same period last year. Earnings per diluted share from continuing operations for the first nine months of fiscal year 2007 was $5.17, up 38.6 percent from the $3.73 reported in the same period in the prior year. Cash flow from operations for fiscal year 2007 to date reached $536.9 million.

'Our ability to generate strong cash flows allows for great flexibility in optimizing shareholder returns,' said Washkewicz. 'For example, cash was used since the beginning of the third quarter to acquire Airtek, a strategic fit for our filtration business; SSD Drives India, which expands our global automation technology platform; Rectus AG, complementing our global fluid handling business; and Rayco Technologies, an Asian based producer of elastomer seals for precision markets. Together, these acquisitions have annual revenues of approximately $166 million. We also made an additional $50 million discretionary contribution to our North American retirement plan in the third quarter.'

Highlights

'This quarter's financial performance keeps us on track to once again exceed our annual profitable growth goal of 10 percent,' said Washkewicz. 'Just as importantly, we continue to grow the company in a very balanced way. Of the quarter's 11 percent sales growth, approximately 5 percent was derived organically, 4 percent came via acquisitions and 2 percent was due to the favorable impact of foreign currency.'

Washkewicz added, 'We're especially pleased at the results coming from our Industrial International segment. The hard work we've done on our European initiatives in recent years, including consolidation of inventory, synchronization of the sales force, and acceleration of low cost manufacturing, has led to sustained and measurable progress in our margins. The Win Strategy initiatives relating to pricing, lean and procurement also continue to drive our success. The clear outcome is that the size and mix of our Industrial International business is more diverse and more profitable than it was during previous business cycles. These factors should allow Parker's overall performance to remain strong despite potential near term slowing in some of our North American markets.'

The quarter also saw the company highlight a number of its new products in an event for editors of the trade media. 'It is gratifying to see the innovative products from our global Winovation program coming to market and gaining customer recognition,' said Washkewicz. 'Core Parker technologies like hydraulics, fluid handling, sealing and filtration are leading to the creation of products that will profitably address growing human needs in areas such as energy, safety and healthcare for years to come.'

Outlook

As a result of the continued strong results, the company increased and narrowed its guidance for fiscal year 2007 income from continuing operations from $6.35 to $6.75 per diluted share to $6.80 to $7.00 per diluted share.

In addition to this information, Parker advises shareholders to note order trends, for which the company makes a disclosure several business days after the conclusion of each month. This information is available on the company's investor information web site, www.phstock.com. Beginning in fiscal year 2008, Parker will begin reporting order trends quarterly instead of monthly.

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal third-quarter results is available to all interested parties via live webcast today at 10:00 a.m. EDT, on the company's investor information web site, www.phstock.com. To access the call, click on the 'Live Webcast' link. From this link, users also may complete a pre-call system test and register for e-mail notification of future events and information available from Parker.
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