2004 Sales, Profits Please the Fastener Industry

John Wolz

The talk of the first half of 2004 was dominated by the rapidly rising cost of steel leading to escalating fastener prices. By the end of the year the news became improved sales and profits.

Both conditions are easily spotted in the End of 2004 FIN / FastenerNews.com Survey.

Indeed the Raw Material Price Index soared, and 98% of manufacturers reported moderate to strong raw material price hikes during the year.

And nearly 70% anticipate further cost increases in 2005, while 20% expect prices to stabilize. A total of 94% saw steel prices increase an average of 55.2% throughout the year. Nine out of 10 manufacturers increased fastener prices in 2004, responding to a harsh raw materials market.

” At 4.4 the FIN Survey sales index is the highest in the 11 years it has been monitored. The previous high was 4.2 for 1994 and 1995 and the low was 2.6 for 2001. The sales index rose for the third year in a row. Manufacturers averaged 4.4 on the index, compared with distributors at 4.3.

” At 4.0 fastener companies profits matched the highs of 1994, “95 and “97. Manufacturers rated their profit year at 3.9, while distributors averaged 4.0.

The gains were widespread with 88.3% of fastener companies reporting sales increases and 78.8% found profits were higher for 2004 than 2003. Sales fell for only 3.6% sales and profits were down for just 8.8%.

” The FIN Company Performance Index jumped from 5.8 to 7.5 the highest since 1997.

“Steel price increases seem to be the spoiler to this good news,” Tony Casilio of AWP Research found. “This issue

figured prominently when respondents described the top two problems their company faced in 2004. The peak increase reported was a whopping 300%,” Casilio pointed out.

Price increases are coming. “Virtually all the respondents (92.7%) reported increasing prices in 2004, and 70.1% plan to do so again in the next six months,” Casilio observed.

” Hiring at fastener firms doubled the 2003 pace as nearly half of all FIN Survey participants increased their workforce. Those results were far better than the 29% of companies who projected hiring more workers at the start of 2004. Nearly 40% of fastener firms surveyed predicted job increases in 2005.

Despite the 2004 success, the industry is not as optimistic about 2005. “Nearly two-thirds expect costs to increase in 2005, and, while 78.1% expect to also see a sales increase next year, less than 60% expect profits to rise in concert with increased sales,” Casilio found. “Global and North American business conditions are expected to be modest, although the results do depict a more promising picture than the one seen in the End of 2003 FIN Survey.” \ �2005 FastenerNews.com