Tuesday, Lincoln Electric Holdings Inc. (LECO), a manufacturer of welding and cutting products, reported a loss for the first quarter from profit a year ago, impacted adversely by rationalization charges and a 33.6% fall in revenues.
Cleveland, Ohio-based Lincoln Electric posted a net loss of $3.6 million or $0.08 per share for the first quarter, compared to net income of $53.5 million or $1.24 per share in the prior year period.
Excluding rationalization charges of $11.7 million, the company recorded net income of $3.8 million or $0.09 per share for the quarter. Nine analysts polled by Thomson Reuters expected the company to earn $0.23 per share. Analysts' estimates typically exclude special items.
Net sales for the quarter dipped 33.6% to $411.75 million, from $620.23 million in the year-ago quarter. The consensus revenue estimate was $418.92 million.
John Stropki, chairman and chief executive officer, commented, "Our first quarter results reflect the difficult challenges and negative impacts of the depressed global economy. The rapid and steep deterioration in overall global demand, combined with the liquidation of our higher cost inventory, resulted in a significant reduction in profitability during the quarter."
North American operations generated revenues of $246.7 million in the quarter, down 33.5% from $371.1 million in the comparable period last year, while U.S. export sales fell 39.9% to $37 million.
Sales at Lincoln subsidiaries outside North America declined 33.7% to $165.1 million. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North America decreased 24.4% in the quarter. Stropki added that the company has been aggressively realigning its business to current market conditions, resulting in substantial pre-tax rationalization charges during the quarter. The restructuring is expected to generate savings of over $80 million for the year.
LECO is currently trading at $40.19, down $0.33 or 0.81%, on a volume of about 256 thousand shares.
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