1/27/2015 3:34:00 PM
NEWS BRIEFS
Grainger Reports “Challenging” 2014 Results
Grainger reported sales, including fasteners, increased 6% to $10 billion in 2014. Net earnings grew 1% to $802 million, while EPS gained 3% to $11.45.
“This was a challenging year, and we were not satisfied with our overall 2014 performance,” stated CEO Jim Ryan. “We addressed several smaller underperforming businesses and believe we have positioned the company for better results going forward.”
During December 2014 Grainger unveiled a plan for its European fastener business, Fabory Group, which the company previously chided for its “soft performance.”
Grainger purchased Fabory in 2011 for $346 million. The previous year, Fabory had generated sales of $295 million, and Grainger hoped that acquiring Fabory, which had 120 locations and more than 1,600 employees, would significantly enhance its presence across Europe.
However, Fabory is currently generating about $280 million in annual income, a sum Grainger called “roughly breakeven” in its November 11 investor presentation.
To improve Fabory, Grainger plans to trim 10-15% of cost out of the business in 2015, which will include branch “rationalization” and “internal process efficiencies.”
In addition, Grainger intends to refocus Fabory on “core fastener growth” by enhancing sales force effectiveness and eCommerce capabilities.
Consolidated Grainger sales in the U.S. rose 7% to $7.9 billion during 2014, while operating earnings grew 10.7% to 1.44 billion.
Full-year sales in Canada contracted 3.5% to $1.07 billion, with segment operating earnings fell 32% to $87.6 million. In the fourth quarter Grainger named Dean Johnson as president of its Canadian business, replacing Eric Nowlin.
Grainger’s Other Businesses segment gained 13.6% to $1.18 billion, while operating earnings slipped to a loss of $37.8 million, hampered by $10 million in charges related to Fabory’s restructuring.
Fourth-quarter sales at Grainger increased 6% to $2.5 billion, consisting of 7 percentage points from volume, 1 percentage point from price and 1 percentage point from sales of Ebola related safety products, partially offset by a 2 percentage points decline from unfavorable foreign exchange.
Q4 operating earnings increased 4% to $267 million, while net earnings dropped 5% to $149 million and EPS decreased 3% to $2.14.
Q4 sales in the U.S. grew 6% to $1.99 billion, driven gains in volume and price.
“Strong sales growth to customers in the natural resources, commercial and manufacturing customer end markets contributed to the sales increase in the quarter,” the company stated.
U.S. operating earnings in Q4 increased 16% to $339 million.
Sales in Canada increased 3% to $279.1 million in Q4, mostly from volume gains to customers in the government and utilities end markets. Operating earnings declined 27% to $19.6 million.
Q4 sales for the Other Businesses segment rose 13% to $307.6 million, with operating earnings declined to a $51 million loss, hurt by actions related to the Fabory restructuring and business changes in Brazil and Colombia.
Related Stories:
• U.S. Fastener Activity Drops Double Digits
• Fastenal Reports Steady Fastener Growth
• Fastener Demand Up 5.4% Annually Through 2018
• Organic Sales Drive Gains at Grainger
Related Links:
• Grainger
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