By Anna Prior
Snap-On Inc.'s (SNA) first-quarter earnings rose 17%, ahead of
Wall Street estimates, as the toolmaker reported improving margins,
though sales in the company's commercial and industrial segment
continued to feel pressure.
"We're encouraged with our first-quarter performance, which
included significant improvement in operating margin and a 15.7%
increase in diluted earnings per share, despite continuing
headwinds that are impacting specific areas of our business," said
Chief Executive Nick Pinchuk.
Snap-On controls a significant size of the professional tool
market, where it competes with Stanley Black & Decker Inc.'s
(SWK) Mac tools unit and Danaher Corp.'s (DHR) Matco. While many of
its products focus on the vehicle dealership and repair-center
market, Snap-On has also sought growth in emerging markets and
higher-margin segments such as power generation and aerospace.
For the latest quarter, Snap-On reported a profit of $82.8
million, or $1.40 a share, up from $71 million, or $1.21 a share, a
year earlier.
Revenue edged up 0.9% to $741.7 million. Excluding currency
impacts, organic sales were up 1.5%.
Analysts polled by Thomson Reuters recently forecast earnings of
$1.34 on revenue of $753.3 million.
The tools segment reported sales growth of 3.4% and operating
earnings climbed 2.4% though margins narrowed slightly. Repair
systems and information segment sales were up 8.8%, while operating
income rose 16.3% and margins increased.
Snap-On's commercial and industrial segment, however, posted a
7% decrease in sales due primarily to lower sales to the military
and economic weakness in Europe that weighed on the segment's
European-based hand tools business. Operating earnings though were
up 4.8% as margins improved.
Meanwhile, sales at the smaller financial-services segment rose
16% and operating earnings rose 28%.
Gross margin widened to 48.1% from 47.3%.
Shares closed Wednesday at $82.51 and were inactive premarket.
The stock is up 38% in the last 12 months.
Write to Anna Prior at anna.prior@dowjones.com
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