Parker Reports Fiscal 2015 Fourth Quarter and Full Year Results

12.08.2015

Parker Hannifin Corporation reported results for the fiscal 2015 fourth quarter and full year ended June 30, 2015. Fiscal 2015 fourth quarter sales were $3.14 billion, compared with $3.53 billion in the same period a year ago, reflecting the effect of currency rate changes and weak end market demand.

Fiscal 2015 fourth quarter net income was $179.6 million, compared with $301.2 million in the prior year quarter. Fiscal 2015 fourth quarter earnings per share were $1.27, compared with $1.98 per share in the prior year quarter. Adjusted earnings per share were $1.43 in the fiscal 2015 fourth quarter, compared with $2.06 per share in the prior year quarter. Fiscal 2015 fourth quarter earnings were negatively impacted by $0.30 per share as a result of a higher effective tax rate due to changes in the geographic mix of pre-tax profits and discrete items booked in the quarter.

"We continue to feel the effects of changes in currency rates and have been taking actions to adjust to weak macro-economic and end market conditions," said Tom Williams, Chief Executive Officer. "Despite the significant year over year sales decline, the company performed well with adjusted segment operating margins growing to 14.9 percent from 14.4 percent in fiscal 2014. We have seen a swift and meaningful drop in order rates in the second half of our fiscal year, and particularly in the fourth quarter. As communicated in April 2015, the company completed a voluntary early retirement program during the fourth quarter. We continue to see opportunities to reduce costs around the world. We are also launching our Simplification initiative as part of the refreshed Win Strategy. Our objectives are to reduce complexity, improve speed and reduce costs, all of which will enable us to better serve our customers. These strategies will help build a more agile Parker that is better positioned to drive long-term, profitable growth and returns for shareholders."

Fiscal 2015 full year sales were $12.7 billion, compared with $13.2 billion in fiscal 2014, primarily impacted by the effect of currency rate changes and weakening end market demand in the second half of the fiscal year. Net income for fiscal 2015 was $1.01 billion, compared with $1.04 billion in fiscal 2014. Fiscal 2015 earnings per share were $6.97, compared with $6.87 per share in fiscal 2014. Adjusted earnings per share for fiscal 2015 were $7.25, compared with $6.94 in the prior year. Fiscal 2015 full year results included $0.38 per share in transaction currency gains that are not anticipated to repeat in fiscal 2016. Despite difficult market conditions, cash flow from operations for fiscal 2015 was $1.3 billion or 10.2 percent of sales compared with $1.4 billion or 10.5 percent of sales in the prior year.

Fourth Quarter Segment Results

Diversified Industrial Segment: North American fourth quarter sales decreased 7 percent to $1.41 billion, and operating income was $228.9 million, compared with $268.7 million in the same period a year ago. International fourth quarter sales decreased 17 percent to $1.14 billion, primarily as a result of the effect of currency rate changes, and operating income was $118.1 million, compared with $137.9 million in the same period a year ago.

Aerospace Systems Segment: Fourth quarter sales decreased 5 percent to $589.2 million, and operating income was $93.5 million, compared with $104.9 million in the same period a year ago.

Orders

Parker reported a decrease of 9 percent in orders for the quarter ending June 30, 2015, compared with the same quarter a year ago. The company reported the following orders by business:

  • Orders decreased 9 percent in the Diversified Industrial North America businesses
  • Orders decreased 5 percent in the Diversified Industrial International businesses
  • Orders decreased 14 percent in the Aerospace Systems segment on a rolling 12-month average basis.

Fiscal 2016 Outlook

For the fiscal year ending June 30, 2016, the company has issued guidance for earnings from continuing operations in the range of $6.15 to $6.85 per share, or $6.65 to $7.35 per share on an adjusted basis. Fiscal year 2016 guidance is adjusted for expected business realignment expenses of approximately $0.50 per share, of which $0.30 per share relates to the company s Simplification initiatives.

"We anticipate continued end market weakness in fiscal year 2016," commented Williams. "Sales are expected to be down slightly and our results will be influenced by ongoing business realignment actions designed to drive efficiencies, streamline our operations and better serve our customers. We also continue to position Parker for future growth. To focus our efforts, we are finalizing a comprehensive refresh of the Win Strategy, which is targeted at driving top quartile financial performance and returns among our industrial peer companies. We are excited about our opportunities to strengthen our leadership position and look forward to sharing the refreshed Win Strategy publicly in September during our Investor Day."

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