Eaton’s Vehicle Segment Sales Fall 16% in Second Quarter
Power management and commercial vehicle supplier Eaton Corp. said quarterly net income fell 8% while revenue slipped 5% compared with the 2015 period.
Net income for the second quarter, ended June 30, dropped to $491 million, or $1.07 per share, compared with $535 million, or $1.14.
Net sales slipped to $5 billion from $5.3 billion a year earlier, the company said.
“Our second-quarter results came in above the midpoint of our guidance, reflecting solid performance despite weak conditions across many of our markets,” Craig Arnold, Eaton chairman and CEO, said in a statement.
“Our 5% sales decline in the second quarter consisted of a 4% decline in organic sales and an additional 1% decline from negative currency translation,” said Arnold.
Eaton, with world headquarters in Dublin, Ireland, has its North American regional headquarters in Cleveland. Its commercial vehicle products include transmissions, clutches and sine wave inverters.
Eaton said its vehicle segment posted sales of $831 million, down 16% compared with the second quarter of 2015. Its organic sales declined 14%, and negative currency translation was 2%.
The company noted North American Class 8 truck production fell 29% in the second quarter compared with 18% a year earlier. It said it continues to expect full-year 2016 production to be 230,000 units.
ACT Research Co. told Transport Topics it currently forecasts production to come in at 237,000 trucks.
The vehicle segment had operating profits of $137 million, down 28% year-over-year, Eaton said.
“Our operating margins in the quarter were 16.5%, and excluding restructuring costs of $5 million, 17.1%,” said Arnold.
“We generated $745 million of operating cash flow in the second quarter, a second-quarter record,” he said.
For the first half of 2016, operating cash flow totaled a record $1.116 billion. “We continued to return substantial cash to our shareholders during the quarter, repurchasing $224 million of our shares, making our first half repurchases a total of $324 million,” he added.
Eaton said net income year-to-date was $895 million, or $1.95, down from $1 billion, or $2.13, in the 2015 period. Revenue dropped to $9.8 billion from $10.5 billion.
Eaton is a power management company with 2015 sales of $20.9 billion, has about 96,000 employees and sells products in more than 175 countries.
