Snap-On 1st-Quarter Profit Rises 17% as Margins Improve

   By Anna Prior 
 

Snap-On Inc.'s (SNA) first-quarter earnings rose 17%, ahead of Wall Street estimates, as the toolmaker reported improving margins, though sales in the company's commercial and industrial segment continued to feel pressure.

"We're encouraged with our first-quarter performance, which included significant improvement in operating margin and a 15.7% increase in diluted earnings per share, despite continuing headwinds that are impacting specific areas of our business," said Chief Executive Nick Pinchuk.

Snap-On controls a significant size of the professional tool market, where it competes with Stanley Black & Decker Inc.'s (SWK) Mac tools unit and Danaher Corp.'s (DHR) Matco. While many of its products focus on the vehicle dealership and repair-center market, Snap-On has also sought growth in emerging markets and higher-margin segments such as power generation and aerospace.

For the latest quarter, Snap-On reported a profit of $82.8 million, or $1.40 a share, up from $71 million, or $1.21 a share, a year earlier.

Revenue edged up 0.9% to $741.7 million. Excluding currency impacts, organic sales were up 1.5%.

Analysts polled by Thomson Reuters recently forecast earnings of $1.34 on revenue of $753.3 million.

The tools segment reported sales growth of 3.4% and operating earnings climbed 2.4% though margins narrowed slightly. Repair systems and information segment sales were up 8.8%, while operating income rose 16.3% and margins increased.

Snap-On's commercial and industrial segment, however, posted a 7% decrease in sales due primarily to lower sales to the military and economic weakness in Europe that weighed on the segment's European-based hand tools business. Operating earnings though were up 4.8% as margins improved.

Meanwhile, sales at the smaller financial-services segment rose 16% and operating earnings rose 28%.

Gross margin widened to 48.1% from 47.3%.

Shares closed Wednesday at $82.51 and were inactive premarket. The stock is up 38% in the last 12 months.

Write to Anna Prior at [e-mail]

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