Motion Industries sees sales drop of 4% in third quarter, with further challenges ahead
Atlanta, GA – For distributor Genuine Parts Company, sales for the third quarter ended September 30, 2015, decreased 2% to $3.92 billion compared to sales of $3.99 billion for the same period in 2014 (all figures in US dollars). Net income for the third quarter was $188.0 million compared to $190.5 million recorded for the same period in the previous year. Earnings per share on a diluted basis were $1.24, equal to the earnings per share for the third quarter last year. Currency negatively impacted revenue growth by approximately 4% and earnings per share by $0.05 in the third quarter.
The company’s 2% third quarter sales decline included underlying sales growth of 1% and a 1% contribution from acquisitions, offset by a currency headwind of approximately 4%. Sales for the Automotive Group were down 2% reflecting core automotive growth of 4% offset by a 6% impact of currency.
Sales at Motion Industries, the company’s Industrial Group, were down by approximately 4%, which basically represents the underlying decrease for this business, as a 1% contribution from acquisitions was offset by an equal currency headwind.
Sales at EIS, its Electrical/Electronic Group, increased by 2% and included approximately 5% growth from acquisitions, offset by a 1.5% decrease in core sales and a 1.5% negative impact of copper pricing.
Sales for S. P. Richards, its Office Products Group, were up 3%, which essentially reflects the underlying growth for this business in the quarter.
Tom Gallagher, chairman and chief executive officer, commented, “The strength in our underlying Automotive distribution business, as well as positive sales growth in the Office and Electrical distribution businesses, was offset by significant foreign currency headwinds and ongoing challenging global economic conditions, particularly in our Industrial distribution business. These factors pressured our overall sales and earnings growth as we moved through the third quarter, although our focus on streamlining operations and controlling expenses drove positive margin expansion.”
Sales for the nine months ended September 30, 2015 were $11.60 billion, up 1% compared to 2014. Net income for the nine months was $544.4 million, basically unchanged from 2014, and earnings per share on a diluted basis were $3.56, up 1% compared to $3.53 in 2014. Currency negatively impacted revenue growth by approximately 3% and earnings per share by $0.11 for the nine months.
“We enter the fourth quarter facing market conditions that have softened, most prominently in our Industrial and Electrical businesses,” Gallagher added. “Based on these uncertain conditions, which are likely to persist through the balance of the year, we expect sales and earnings to be further challenged as we work our way through the final quarter of 2015.
“We have initiatives in place in each of our businesses [that] are designed to stimulate sales and earnings growth in the coming quarters. While these initiatives will take time to fully materialize in our quarterly results, our teams are committed to generating growth both organically and through selective accretive acquisitions, [which] should enhance the long-term growth profile of our four businesses in the coming years.
“Our strong cash flow generation, driven by significant working capital improvement and our strong balance sheet, provide us with the ability to support these initiatives. Additionally, we expect to continue to maximize shareholder value with our dividend and ongoing share repurchase program,” Gallagher concluded.