Timken ( TKR), the Canton, Ohio, maker of specialty steel products, reported a 91% decline in first-quarter profit, before items, from a year ago as the global recession continued to hurt demand for its industrial bearings and related equipment.

The company announced a plan to lay off more than 7,000 workers. It also said it would slash its 2009 dividend by 50% to 9 cents a share and sounded warning notes for the rest of the year.

In a conference call with analysts, the company reduced its projections for 2009, saying it now expects to lose 15 cents for the year, compared with earlier guidance of a profit of $1.30 to $1.60 a share. Analysts as polled by Thomson Reuters had expected the company to be in black for the year, with a profit of 78 cents a share.

"It's now clear that the impact of the recession on the demand for our products will be deeper and longer lasting than we anticipated," Timken's president and CEO, James W. Griffith, said in a press release announcing the results.

For the quarter, Timken reported earnings of $900,000, or a penny a share, compared to $84.5 million, or 88 cents a share last year. Excluding special items, however, Timken earned $7.1 million, or 7 cents a diluted share, down from the year-ago period's $78.9 million, or 82 cents a share.

On the top line, Timken reported $960.4 million in first-quarter revenue, a 33% fall-off from the $1.43 billion it posted a year earlier.

Timken beat analysts' per-share estimates of a 2-cent loss for the quarter, according to Thomson Reuters, though the company fell short of revenue targets of $1.08 billion.

As for those special items, Timken took $6.2 million in charges related to impairments and severance payments, while a year ago, the company had $5.6 million in gains on the sale of assets.

Timken expects to save $140 million a year not only by making the announced staff reductions, which will amount to 25% of its workforce, but also by cutting pay for many of those who remain at the company. Charges associated with those moves could result in a $70 million charge on the year, Timken added.

Not surprisingly, the sharpest declines at the company occurred in its "mobile industries segment," which makes parts for the automotive industry. First-quarter sales in the division plummeted 41% to $373 million.

In afternoon trading, Timken shares were off by more than 13% at 14.64.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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