Kennametal Reports 3% Sales Decline in Q2 Fiscal 2025, Operating Income Increases

Kennametal Inc. reported a decline in financial performance for the second quarter of fiscal 2025, with total sales of $482.1 million, down 3% from $495.3 million in the same period last year. The decrease was attributed to an organic sales decline of 6%, partially offset by a favorable business days effect of 3%. For the six months ended December 31, 2024, sales totaled $964.0 million, a decrease of 2% from $987.8 million in the prior year. The company's operating income increased to $31.7 million from $28.5 million year-over-year, driven by lower raw material costs and restructuring savings.

The Metal Cutting segment experienced a sales decline of 4% for the three months ended December 31, 2024, with operating income dropping to $16.6 million from $25.5 million in the prior year. In contrast, the Infrastructure segment saw a significant increase in operating income to $15.6 million from $3.2 million, supported by insurance recoveries and advanced manufacturing credits. The overall operating margin improved to 6.6% from 5.7% in the previous year, reflecting the company's efforts to manage costs amid inflationary pressures.

Kennametal's restructuring initiatives, which began in June 2023, have led to total charges of $22 million, with plans for further actions including potential plant closures and workforce reductions to enhance competitiveness. The company anticipates annualized savings of approximately $15 million from these initiatives by the end of fiscal 2025. As of December 31, 2024, the company had cash and cash equivalents of $121.2 million and total debt of $597.8 million, maintaining a strong liquidity position.

In terms of geographic performance, sales in the Americas decreased by 2%, while EMEA saw a 5% decline, primarily due to lower activity in the General Engineering and Transportation end markets. The Asia Pacific region remained stable, with a slight decline of 2%. The company continues to monitor macroeconomic conditions and is focused on mitigating the impacts of inflation and foreign currency fluctuations on its operations.

Looking ahead, Kennametal remains cautious about the economic environment, particularly in EMEA, and is committed to executing its strategic initiatives to drive growth. The company plans to continue investing in product development and operational efficiencies while managing costs effectively to enhance shareholder value.