We have targeted opportunities in our energy business, primarily in our manufacturing operations at Krombach, Germany, as well as other European sites within Fluid Handling. While we have consistently delivered fluid handling margins in the 13% range, executing on these important actions will accelerate continued improvement. We expect the benefit of these actions to impact our results beginning in 2013.
Krombach is a highly engineered provider of specialized double and triple offset butterfly valve, as well as metal and soft-seated ball valves. Our manufacturing operation at Krombach in Kreuztal, Germany, with a highly skilled workforce continues to be a segment strategic platform to drive profitable growth. As we previously discussed, the integration of the Krombach operations presented challenges typically associated with a long-standing privately run business in Germany.
While we have completed a number of actions, including upgrading the information systems, consolidating product lines from another German facility to improve plant utilization and various other operational improvements, all of which have taken longer than planned, we are taking targeted actions to drive significant cost improvements as we close 2012.
Specifically we are transferring certain Krombach product lines to lower cost Crane facilities, dedicating additional Crane resources to drive both commercial and operational improvement and reducing headcount at the primary manufacturing facility. In addition to the European repositioning actions, earlier in the year we initiated an internal merger between our ChemPharma and energy groups. This merger will further streamline the organization and provide better leverage of a wider pool of resources to help drive these important actions. It is also important to recognize that excluding our energy business, we are very pleased with the balance of the Fluid Handling segment, where operating margins exceeded 15% in the second quarter.In April we said that we expected full-year Fluid Handling margins to be at 14%, although it would be tougher to achieve given first-quarter results. Excluding special items, we have revised our full year fluid handling operating margin guidance to 3.5% as the repositioning 12.6% margin in the second quarter was slightly below our expectations, and our repositioning programs while moving forward are taking longer than anticipated to work through principally due to German labor protocols.Read the rest of this transcript for free on seekingalpha.com
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV