Kennametal welcomes your cutting-edge remarks. The company offers a host of metal-cutting tools and tooling supplies for machining steel, equipment for mining and highway construction, and engineering services for production processes. Its lines include cutting, milling, and drilling tools used in metalworking; drums, bits, and accessories used in mining; and grader blades used in construction. The company, which sells its products globally, serves customers in the aerospace, defense, transportation, engineering, energy, and mining sectors. Its customers have included such giants as Honda, Caterpillar, and Pratt & Whitney Canada. More than half of sales come from outside of the US.
Kennametal reports through two segments, Industrial and Infrastructure. Kennametal's Industrial segment, 61% of sales, serves the aerospace, defense, transportation, and general engineering sectors by focusing on products needed for the manufacturing of engines, airframes, cars, trucks, ships, and other industrial goods. A diverse range of products and customization services create valuable synergies for the segment's customers. Kennametal's Infrastructure segment addresses the needs of energy and earthworks companies who serve such sectors as oil and gas, power generation, food and beverages, highway construction, and road maintenance. This segment expanded with the 2012 acquisition of UK-based Deloro Stellite. Infrastructure works closely with customers to understand their technical needs.
Kennametal operates facilities in the US, Brazil, Canada, Europe, India, Israel, and South Africa.
Sales rose 14% and operating income was up 29% in fiscal 2012 compared with 2011. By segment Industrial ticked up 9% in 2012 vs. 2011 thanks in part to increased car production in the US and growth in the manufacturing of commercial aircraft and metalworking machinery. Capital spending for industrial machinery also created more demand for the Industrial segment. Infrastructure sales soared 22% in fiscal 2012 compared with 2011. The segment's earthworks business responded to strong demand from Asian mining customers and from the Asian and European road maintenance markets. Sales for the segment's energy business grew in response to higher shale and natural gas production. Along with growth in revenue, the company's net income rose about 34% in fiscal 2012 vs. 2011.
With foreign markets representing about 57% of the company's sales, Kennametal is looking to expand its sales and manufacturing operations outside the US. The acquisition of multinational Deloro Stellite helps further that strategy. Product development is another important prong of Kennametal's strategy. New products accounted for about 40% of sales in fiscal 2012. Aiding the company's growth more generally, a recently completed restructuring program that created more efficiencies and lowered costs has resulted in annual savings of about $170 million.
In early 2012 the company acquired Deloro Stellite from Duke Street Capital for €277 million (about $360 million). Deloro Stellite makes high-alloy wear-resistant components for customers in the oil and gas, power generation, transportation, and aerospace industries. Besides the UK, it has facilities in Canada, China, Germany, India, Italy, and the US. – less