Eaton's second quarter results were down compared to last year's, but the company's truck segment operated at breakeven compared to a year ago.

Eaton posted second quarter 2001 net income of $66 million before unusual items on sales of $1.87 billion. That compares with a net income of $123 billion on sales of $2.17 billion in second quarter 2000. After all unusual items, including a $16 million charge related to the restructuring of its Truck, Fluid Power and Industrial & Commercial Controls segments, Eaton's second quarter 2001 net income from continuing operations was $49 million.
"These are tough times for U.S. manufacturing and for Eaton,” said Chairman and CEO Alexander Cutler. “While we remain hopeful that, in aggregate, we are seeing a bottoming in activity levels, we do not anticipate that our North American markets will rebound meaningfully before year-end. In addition, European, Asian and, to a lesser extent, South American markets are beginning to decline in lagged response to the North American weakness.”
Truck segment sales of $260 million were 36 percent below last year's second quarter. NAFTA Class 8 truck production during the period was down 47 percent, NAFTA medium duty trucks were off 34 percent, European truck output was off 4 percent and South American commercial vehicle production was down 15 percent. Before restructuring charges, the segment operated at breakeven compared to operating profits of $52 million one year ago.
"A year of severe production declines has eliminated much of the industry-wide glut of new trucks in NAFTA, though stocks of good used trucks remain excessive and will continue to depress production through year-end,” said Cutler. “The impact of lower diesel fuel prices, easier credit conditions and more stable freight demand should also begin to improve market conditions as we move into 2002. Our worldwide business is now sized and structured to take full advantage of any upturn."
Second quarter sales of Eaton's largest business segment, Fluid Power, were $656 million, 4 percent below one year earlier. Excluding the impact of three acquisitions made over the past year, comparable sales were off about 8 percent compared to a nearly 19 percent drop in North American fluid power industry shipments. Segment profits before restructuring charges were $60 million, down 24 percent from one year ago.
Second quarter Industrial & Commercial Controls sales were $564 million, down almost 7 percent from last year. Excluding divestitures, sales were off about 4 percent compared to a 5 percent decline in North American markets. Segment profits were $53 million before charges, off 18 percent from one year ago.
Second quarter Automotive segment sales of $391 million were 1 percent below year ago levels excluding sales of the divested Vehicle Switch and Electronics Division, which are now reported in Divested Operations. This compares to a 10 percent decline in NAFTA automotive output, flat European production, and a 20 percent increase in South America. Segment profits of $55 million were down 13 percent from one year ago.
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