Grainger reported sales, including fasteners, were flat at $2.47 billion in the fourth quarter of 2016, with operating earnings down 31% to $174 million and net earnings falling 58% to $61 million.

“On a daily basis, total company sales were up 1% for the quarter,” the company stated.  “The 1 percent daily sales increase consisted of a 1 percentage point increase from volume and a 1 percentage point increase from the timing of the holidays in December, partially offset by a 1 percentage point decline from price.”

Q4 sales in the U.S. dropped 1% to $1.9 billion, hurt by volume and price declines.  Government, retail and light manufacturing customers had the strongest sales performance in the quarter. Operating earnings for the U.S. segment fell 11% to $251.5 million, driven by the restructuring costs, other charges, lower sales and lower gross profit margins. 

Q4 sales in Canada at Acklands-Grainger declined 11% in U.S. dollars to $181.4 million, which included a 7 percentage point decrease from volume and a 4 percentage point decrease from price. The business in Canada posted a $10 million operating loss in Q4, hurt by price deflation versus cost inflation and higher freight costs from the increase in shipping direct to customers. 

Q4 sales in Europe, Asia and Latin America increased 11% to $483.5 million, composed of volume and price gains.  However, this segment posted a $36 million operating loss for the quarter, driven by a goodwill impairment for Fabory and Colombia.

Grainger acquired Fabory in 2011 for $346 million.

Full-year Grainger sales increased 1.6% to $10.14 billion, while operating earnings declined 14% to $1.1 billion and net earnings 19% to $632.8 million.  Capital expenditures dropped 24% to $284 million. 

“In 2016 we faced a challenging demand environment compounded by a lack of inflation, which put pressure on revenue and gross margins,” stated CEO DG Macpherson.

Sales in the U.S. declined 1.2% to $7.9 billion in 2016, with operating earnings down 7% to $1.27 billion.

Sales in Canada dropped 17% to $733.8 million during the year, with a operating loss of $65.4 million.

Full-year sales in Europe, Asia and Latin America grew 34% to $1.9 billion, with operating income slipping 15% to $40.7 million.

For 2017, Grainger forecasts 2%-6% sales growth and earnings per share of $11.30 to $12.40.