Filtration systems provider Donaldson Company, Inc. (DCI) Friday cut its earnings and sales forecast for the year, after reporting a marginal drop in third-quarter profit as sales growth continued to be challenged by the global economic environment.
Bill Cook, Donaldson's CEO, said, "We believe that the weak end-market conditions we have experienced this year may have now stabilized. Unfortunately, we have not yet seen any strong signs of a material recovery for our Customers in any of our capital equipment-related end markets and, therefore, we are not anticipating sales growth in these markets for at least the next quarter.''
As a result, the company sees fiscal year 2013 earnings between $1.57 and $1.65 per share while annual sales are estimated to be in the range of $2.40 billion to $2.45 billion.
On average, 13 analysts polled by Thomson Reuters expect earnings of $1.69 per share for the year. Analysts' estimates typically exclude special items. Wall Street sees revenues of $2.51 billion.
The company's previous forecast, issued in February, was for earnings in a range of $1.61 to $1.81 per share and sales approximately equal to last year's $2.5 billion.
Net earnings for the third quarter edged down to $69.84 million from $70.95 million in the prior year. Earnings per share remained flat with last year at $0.46. Excluding special items, earnings for the just concluded quarter totaled $0.47 per share. Analysts expected earnings of $0.49 per share for the quarter.
Net sales dropped 4 percent to $619.37 million from $647.24 million. Analysts expected revenues of $659.41 million. The impact of foreign currency translation decreased sales by 1.6 percent.
Gross margin improved to 35.8 percent from 35.3 percent, primarily due to a higher percentage of sales coming from replacement filters and the benefits from the Continuous Improvement initiatives.
Segment-wise, Engine Products generated $383.31 million, down 6 percent from last year, amid declines in OEM businesses in the U.S. and Japan.
Total Industrial Products segment sales slid 2 percent to $236.06 million. Within the segment, Gas Turbine Products' sales increased 35 percent as the firm delivered a number of large projects to customers.
The stock closed at $38.10 on Thursday.
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