Pittsburgh-based Kennametal expects 2024 sales and profits to come in below 2023 results after updating its full-year outlook to reflect the “macro-economic conditions we are now seeing”.
CEO Christopher Rossi said this included “softening across our end markets and no recovery in China this fiscal year”.
The US manufacturer produces metal tooling and wear-resistant components for aerospace, defence, mining, construction, energy and engineering customers. It reported FY2023 sales and earnings per share of US$2.1 billion and $1.46, respectively.
This week it changed its FY2024 outlook to $2.02-2.07 billion revenue and EPS of $1.35-$1.65 from $2.1-2.2 billion and $1.75-$2.15 forecast last November.
Q2 sales for the period to December 31, 2023, totalled $495 million ($497 million in the prior year quarter) and earnings per diluted share 29c compared with 27c a year earlier. Kennametal had earlier forecast FY24 Q2 sales at $490-515 million.
“Once again this quarter we generated strong cash from operations, even though sales were at the lower end of our outlook due to softening market conditions, most notably in December,” Rossi said.
“We remain focused on the things we can control including gaining share and accelerating progress on our $100 million in cost reductions by the end of FY27. As a result, we are taking additional actions to increase the savings of our current restructuring program from $20 million to $35 million by the end of FY24.
“These steps, coupled with our extended share repurchase program, continue to give me confidence that we will drive long-term value for shareholders.”
Kennametal is accelerating company stock repurchases despite the cost reductions within the business.
The company also paid $16 million in cash dividends to Kennametal shareholders in Q4.
