Three Abrasives Companies Announce Financial Results
28 January 2011
3M, Grindwell Norton and Carborundum Universal have all posted financial results this week. 3M reported fourth-quarter sales of $6.7 billion, up 9.6 percent year-on-year including an 8.6 percent increase in organic volumes. Net income was US$928 million, or $1.28 per share, versus $935 million, or $1.30 per share in the corresponding period last year.
In the quarter ended Dec 2010, Grindwell Norton’s has posted figures that show net profit grew by 17% to Rs. 20.48 crore. Healthy sales in abrasives and ceramics & plastics sales were responsible for the growth. There was a fall in operating profit margin (OPM) by 290 bps constrained the operating profit growth to meager 4% to Rs. 26.20 crore. Increase in other income, fall in interest cost and effective tax rate lifted the net profit by 17% to Rs. 20.48 crore.
Carborundum Universal (CUMI) coated and bonded abrasives and alumina ceramic manufacturing company, has reported a 56% increase in the consolidated Net Profit at Rs. 36.79 crore over 27% jump in the total income from Operations at Rs. 421.53 crore. Thanks to strong demand in the Indian and Russian market in latest quarter.
Growth in all of 3M’s businesses
Quarterly organic sales volumes increased in all six of 3M’s businesses, and on a geographic basis, organic volume growth was strongest in Asia Pacific at 18.1 percent and Latin America at 12.2 percent. "3M made great progress in 2010 as we achieved record sales and earnings per share for the year, and made significant investments to improve long-term growth," said George W. Buckley, 3M chairman, president and chief executive officer. "For example, our research and development investments of $1.4 billion fueled innovation and drove new productsales as a percent of total to 31 percent. We also accelerated sales and
marketing investments in high-growth markets to help secure future growth.."
Sales for the full year 2010 were $26.7 billion, up 15.3 percent compared to 2009. Organic volume increased 13.7 percent, with acquisitions adding 0.9 percent to sales, foreign exchange adding 1 percent to sales, and selling prices down 0.2 percent year-on-year. Local-currency sales grew by 27 percent in Electro and Communications, 23 percent in Display and Graphics, 17.5 percent in Industrial and Transportation, 10 percent in Consumer and Office, 7.5 percent in Safety, Security and Protection Services, and 5.2
percent in Health Care. Operating income margins were 22.2 percent versus 20.8 percent in 2009. Full year net income was $4.1 billion or $5.63 per share, versus $3.2 billion, or $4.52 per share, in 2009.
Grindwell Nine Month Performance
In nine months ended Dec 2010, the operating income grew by healthy 33% to Rs. 554.33 crore backed by growth across abrasives and ceramics sales. Fall in OPM by 280 bps to 14.3% constrained the operating profit growth to 12% to Rs. 79.46 crore. Nevertheless, growth in other income by robust 42% to Rs. 19.64 crore and marginal growth in non operating expenses lifted the PBT by 17% to Rs. 86.91 crore. The net profit settled with 20% growth to Rs. 59.30 crore thanks to 200 bps crash in effective tax rate.
Abrasives drives growth for CUMI
CUMI has reported strong 61% increase in the Net Profit at Rs. 23.62 crore over 26% increase in the total income from Operations at Rs. 243.02 crore in the quarter ended December 2010. CUMI Standalone abrasives registered a growth of 25% in sales driven by buoyancy in the Indian markets. Both bonded abrasives and coated abrasives witnessed double growth rates. Strong off take was witnessed for non standard products both from the dealer and direct customer segment.
The sales of abrasives in Russia increased by 91% mainly on the back of improved off take from auto, auto component and steel markets. Both the North America subsidiaries CUMI America and CUMI Canada staged smart recovery in sales following improved off take from various customer segments. The company expects buoyancy in revenues to continue .The main challenge will be in the form of increasing raw material prices which will be addressed through price corrections and improved efficiencies.