For the year, sales to North America, which had the strongest regional growth, were up $31.6 million to $90.0 million. Sales to Europe were up $30.4 million, or 41%, while sales to Asia & Other grew $22.6 million to $146.7 million. Included in sales to Asia & Other in 2010 and 2011 were approximately $29 million and $15 million, respectively, related to the orders from a China-based supplier to the consumer electronics industry. The Company believes that its geographic diversity helps to offset economic impacts that can vary from region to region around the world.
Approximately 23% of sales in both the fourth quarter and full year 2011 were from parts and service, which is representative of the typical mix of machine tools and repair parts/service given the large installed base of Hardinge brands around the world.
Fluctuations in Hardinge’s sales in total and among geographic locations and industries can vary from quarter-to-quarter based on the timing and magnitude of orders and projects. Hardinge does not believe that such quarter-to-quarter fluctuations are indicative of business trends, which the Company believes are more apparent on a trailing twelve-month basis.
Leverage Realized on Higher SalesGross profit was $23.1 million, or 25.4% of sales, in the 2011 fourth quarter compared with $19.7 million, or 24.1% of sales, in the same period of the prior year. When compared with the 2011 third quarter gross margin of 28.3%, gross margin was negatively impacted approximately 120 basis points as a result of year-end inventory adjustments and an additional 110 basis points due to product and geographic mix. For the year, gross profit in 2011 was $91 million, or 26.6% of sales, compared with $61.3 million, or 23.8% of sales, in the prior fiscal year as a result of the leverage gained on higher sales volume.