Timken Co., an industrial bearing and steel maker, cut its dividend in half, from 18 cents per share to 9 cents, to preserve cash as it struggles with shrinking markets across nearly its entire business.
The company said that receding global demand for products has resulted in a significant reduction in workforce. Since the beginning of 2008, through the end of 2009, Timken estimates it will have cut 7,000 jobs. In its April 27 first-quarter earnings report, Timken said it was more than halfway toward reaching that number, but more cuts were to be expected. As demand picks up, the company said it would expand its workforce again.
Timken reported that slack demand for industrial bearings and high commodity prices drove first-quarter 2009 profit down 99 percent to $870,000, or 1 cent per diluted share, from $85.4 million, or 88 cents per share, in the same period a year earlier. Timken also said sales for the period that ended March 31 declined 33 percent to $960.4 million compared with $1.4 billion in quarter one 2008.
Timken said in recent years it has made significant strides in diversifying its portfolio. In 2002, 40 percent of its business was automotive. Today, it's less than 25 percent, while the total company sales comparison went from $2.2 billion in 2002 to $5.7 billion in 2008. Timken hopes for growth in its aerospace and defense sales.