Profits, net income drop for Eastern Co.
NAUGATUCK — The Eastern Co. announced Oct. 23 that third-quarter profits were down by nearly 20 percent due mostly to continued “softness” in the global economy.
The Naugatuck-based conglomerate also said net income for the first nine months of 2013 fell by nearly 30 percent.
According to the company, net income in the third quarter was $1.8 million, or 29 cents per diluted share, a 19 percent decrease from the $2.2 million, or 36 cents per diluted share, it reported in the third quarter of 2012.
Net sales for the quarter were $34.3 million, down 14 percent from net sales of $39.6 million for the third quarter last year.
For the nine-month period ended Sept. 28, net earnings were $5 million, or 80 cents per diluted share, down 28 percent from $6.9 million, or $1.11 per diluted share, for the same period last year. Net sales in the period were $108.2 million, down 11 percent from $121.7 million in the first nine months of 2012.
“The sales decrease in both the third quarter and nine-month period of 2012 when compared to the prior year periods was primarily the result of continued softness in the general economy,” Leonard Leganza, Eastern’s chairman, president and chief executive, said in a news release. “The decreases in sales at most of our operating units reflected that softness.”
Leganza said the third quarter in particular was “affected by the slowness in the manufacturing sector … as a result of vacations and a strike at one of our Class 8 truck customers.”
Eastern is a 155-year-old company that makes vehicular and industrial hardware, metal castings, coin-vending and smart card products and locks and other security products in nine manufacturing plants in the United States, Canada, Mexico, Taiwan and China.
Leganza said that in addition to much lower sales volume, income for both the third quarter and nine-month period was reduced by “the costs related to the relocation of one of our operations in China.”
He noted that while sales of products used primarily in coal mining have not been negatively affected by “the so-called ‘war on coal,’” the Metal Products segment continues “to explore other markets for both malleable and ductile iron cast products.”
The Security Products segment has seen its sales of more advanced electronic products introduced in recent years in the commercial laundry market continue to slow in the United States, but gain “wider acceptance in foreign markets,” he said.
“Despite the economic uncertainty still lingering in the marketplace, our view of the future has not held us back from improving our facilities,” Leganza said. “The focus and emphasis we have placed on cash flow during the recent years of economic uncertainties have sustained the company in solid financial position.”
As evidence of that, the company’s board of directors approved Eastern’s regular quarterly dividend of 11 cents per share for stockholders of record as of Oct. 20, 2013, payable on Dec. 16, 2013. It will be the company’s 293nd consecutive quarterly dividend, meaning Eastern has issued a dividend for more than 73 straight years.