Eaton Corp. fourth quarter 2001 earnings were in line with expectations, in spite of weaker end markets.
Eaton posted fourth quarter 2001 sales of $1.69 billion, 13% below last year. Net income before unusual items was $47 million compared to $72 million in 2000. After all unusual items in both periods, fourth quarter net income was $30 million compared to $58 million last year.
For the full year 2001, sales were $7.3 billion compared to $8.3 billion for 2000. After all unusual items in both periods, full year net income was $169 million, compared to $363 million in 2000.
"2001 was an exceptionally challenging year, as market conditions declined all year long,” said Alexander M. Cutler, Eaton chairman and CEO. "Our forecast for our end markets during 2002 has changed. In several of our businesses, the markets were not as strong in the fourth quarter as had been anticipated. We expect that Eaton's end markets will decline further in the first quarter and will remain below current levels until the second half of 2002."
Fourth quarter Truck segment sales of $235 million were 14% below those in the same period last year. NAFTA heavy truck production for the quarter was down 30%, while NAFTA medium-duty truck production was up 5%. European truck production was down 17% and South American production was down by 8%. Before restructuring charges, segment operating losses were $9 million compared to $12 million a year ago.
"After three quarters of breakeven operating results, the Truck segment showed a loss in the fourth quarter of 2001," said Cutler. "Compared to fourth quarter 2000, losses were reduced by $3 million on a $38 million drop in volume. Given the continued decline in our Truck segment's end markets, it is clear that the benefits of our restructuring program are being realized."
Published reports indicate that Eaton may cut 1,100 more jobs worldwide this year as part of another restructuring plan.
"We expect that NAFTA heavy-duty truck production will reach 150,000 units in 2002, up marginally from 2001 levels. As the market begins to strengthen later this year and then more strongly in 2003, we are very confident of the earnings leverage in this business."
Fourth quarter sales of Eaton's largest business segment, Fluid Power, were $578 million, 8% below one year earlier. This compares to a decline of about 10% in Fluid Power's markets, with North American fluid power industry shipments off about 15%, and aerospace markets off about 5 percent. Segment profits before restructuring costs were $41 million, down 43% from a year ago.
Fourth quarter Industrial & Commercial Controls sales were $528 million, down 14% from last year. Excluding divestitures, sales were off about 12%, compared to an estimated 27% decline in North American markets. Segment profits were $44 million before restructuring charges, down 31% from one year ago.
Fourth quarter Automotive segment sales of $354 million were virtually the same as a year ago, compared to a 3% decrease in NAFTA automotive production and a 3% decrease in European automotive production. Segment profits were $44 million, compared to $46 million a year ago.
Eaton posted fourth quarter 2001 sales of $1.69 billion, 13% below last year. Net income before unusual items was $47 million compared to $72 million in 2000. After all unusual items in both periods, fourth quarter net income was $30 million compared to $58 million last year.
For the full year 2001, sales were $7.3 billion compared to $8.3 billion for 2000. After all unusual items in both periods, full year net income was $169 million, compared to $363 million in 2000.
"2001 was an exceptionally challenging year, as market conditions declined all year long,” said Alexander M. Cutler, Eaton chairman and CEO. "Our forecast for our end markets during 2002 has changed. In several of our businesses, the markets were not as strong in the fourth quarter as had been anticipated. We expect that Eaton's end markets will decline further in the first quarter and will remain below current levels until the second half of 2002."
Fourth quarter Truck segment sales of $235 million were 14% below those in the same period last year. NAFTA heavy truck production for the quarter was down 30%, while NAFTA medium-duty truck production was up 5%. European truck production was down 17% and South American production was down by 8%. Before restructuring charges, segment operating losses were $9 million compared to $12 million a year ago.
"After three quarters of breakeven operating results, the Truck segment showed a loss in the fourth quarter of 2001," said Cutler. "Compared to fourth quarter 2000, losses were reduced by $3 million on a $38 million drop in volume. Given the continued decline in our Truck segment's end markets, it is clear that the benefits of our restructuring program are being realized."
Published reports indicate that Eaton may cut 1,100 more jobs worldwide this year as part of another restructuring plan.
"We expect that NAFTA heavy-duty truck production will reach 150,000 units in 2002, up marginally from 2001 levels. As the market begins to strengthen later this year and then more strongly in 2003, we are very confident of the earnings leverage in this business."
Fourth quarter sales of Eaton's largest business segment, Fluid Power, were $578 million, 8% below one year earlier. This compares to a decline of about 10% in Fluid Power's markets, with North American fluid power industry shipments off about 15%, and aerospace markets off about 5 percent. Segment profits before restructuring costs were $41 million, down 43% from a year ago.
Fourth quarter Industrial & Commercial Controls sales were $528 million, down 14% from last year. Excluding divestitures, sales were off about 12%, compared to an estimated 27% decline in North American markets. Segment profits were $44 million before restructuring charges, down 31% from one year ago.
Fourth quarter Automotive segment sales of $354 million were virtually the same as a year ago, compared to a 3% decrease in NAFTA automotive production and a 3% decrease in European automotive production. Segment profits were $44 million, compared to $46 million a year ago.
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