International sales drive Astec growth
By Chris Sleight22 July 2008
Aggregates and road building equipment manufacturer Astec Industries had sales of US$ 541 million in the first half of the year, a +22% increase on the first half of 2007. Operating profit was up +14% to US$ 60 million.
Growth was strongest in the company's Underground Group, which makes trenchers and horizontal directional drilling rigs. Its revenues were up +26% to US$ 69 million in the first half of the year. Not far behind was the Mobile Asphalt Paving Group, which makes road building equipment, with a +21% increase in sales to US$ 102 million.
Although Astec saw growth across the board, its sales outside the US were up much further than domestic sales. In the second quarter of the year international sales totalled US$ 93 million, a +33% increase on the same period in 2008. In contrast, its US sales were up +18%.
Commenting on the results, Astec chairman and CEO Dr J. Don Brock said, "We are please with the company's second quarter earnings. International sales continue to be strong, accounting for 33.5% of the second quarter volume."
However, Dr Brock also warned that the rising cost of materials was having an impact on profitability. "Rapid increases in the cots of steel and components were the primary reasons for the decline in gross margin. Year-to-date gross margin for 2008 has only declined -1.1% compared to the first half of 2007. We anticipate that inflation will continue to be a challenge during the second half of 2008."