Kinecor’s 2Q sales slide 5 percent

Industrial Distribution staff -- Industrial Distribution, 8/11/2008 2:24:00 PM

Second-quarter sales for Kinecor LP slipped 4.5 percent to $76.1 million, compared with $79.7 million during the same period last year.

Earnings for the Canadian bearings, power transmission and hydraulics distributor fell 21.2 percent to $4.1 million, compared with $5.2 million during the second quarter of 2007.

Kinecor, which is a division of Wajax Income Fund, attributed the slide in part to the strength of the Canadian dollar against the U.S. currency; that difference contributed to a $2.8 million decrease in quarterly sales as currency-related price reductions on U.S. imports were passed on to customers.

The company said sales were also hit by the ailing Canadian forestry, mining and natural gas industries. Kinecor also spent $1.3 million installing a new computer system, a project set to be complete during the first half of 2009.

The new computer system, currently being implemented in Kinecor, will provide additional functionality and capacity which will accommodate the segment’s future growth. The system will be implemented into Kinecor’s operations across Canada in four stages during 2008 and the first half of 2009.

“Looking forward, management continues to be concerned about the strength of several sectors of the Canadian economy, particularly manufacturing, forestry and residential construction. However, management anticipates a continuing benefit from strong sectors such as mining and infrastructure, plus further growth in after-market support revenue. As well, management continues to be optimistic that an increase in natural gas drilling activity in western Canada may occur in the latter part of this year. As a result, management expects 2008 full year earnings to show improvement over the previous year,” the company said in a statement.

Kinecor ranked 25th on INDUSTRIAL DISTRIBUTION’s 2008 Big 50 list of distributors, with 2007 sales of $291.4 million.

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