Kennametal reports 2% sales increase YOY for fiscal Q2
Kennametal Inc. reported sales of $497 million represent a 2 percent increase over its $487 million in the prior year quarter, reflecting organic growth of 11%, partially offset by an unfavorable currency exchange effect of 8% and an unfavorable business days effect of 1%. The company's fiscal 2023 second quarter ended December 31, 2022.
"Our second quarter fiscal 2023 results reflect strong organic sales growth and cash flow generation," said Christopher Rossi, president and CEO. "We are encouraged by the resiliency of our end markets and our expectations for the full year remain largely the same. While each quarter can present challenges in this environment, we are confident in our Commercial and Operational Excellence initiatives driving long-term growth and profitability."
Fiscal 2023 Second Quarter Key Developments
Operating income was $35 million, or 7.1% of sales, compared to $48 million, or 9.8% of sales, in the prior year quarter. The decrease in operating income was primarily due to higher raw material costs of approximately $23 million, higher wages and general inflation, including an inflationary bonus of $2 million for certain German employees, unfavorable foreign currency exchange of approximately $6 million, and in the Infrastructure segment, under-absorption of approximately $5 million mainly due to reduced powder production to actively manage the drawdown of safety stock. These factors were partially offset by higher price realization and higher sales volumes. Operating income was not adjusted in the current quarter, whereas adjusted operating income was $45 million, or 9.2% margin, in the prior year quarter.
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