Eaton takes 1Q hit but stays profitable

A restructuring charge pushed down first-quarter 2002 earnings for truck component supplier Eaton Corp., but the company managed to be profitable nonetheless. Cleveland, OH-based Eaton said its sales in the first quarter of 2002 topped $1.72 billion, down 13 % from the same period last year, and net income plummeted to $33 million, compared to $73 million in the first quarter of 2001. Eaton said it took pre-tax charges of $49 million in the first quarter of this year as it restructured its operations. However, Eaton Chairman & CEO Alexander Cutler said the company's restructuring efforts in this quarter and in 2001 should save $130 million by the end of this year. He also expects Eaton will take another $10 million worth of charges to cover the cost of those efforts before 2002 is over. In terms of trucking industry-related business, Cutler said first quarter 2002 sales dropped 9% to $255 million compared to the same period last year. He added that truck production rates worldwide were down in the first quarter of 2002 compared to last year. North America heavy-duty truck production was down 8%, medium-duty truck production dropped 9%, European truck production fell 16% and South American truck production decreased 4%. Cutler, however, is confident that new truck sales will rise before 2002 is over. "We are increasingly confident that our truck business has bottomed, as both industry order levels and our own orders have started to climb substantially," he said. "We expect that second quarter heavy-duty truck production could increase as much as 20% to 25% from current levels for a full-year forecast of 150,000 heavy-duty units in 2002."