Shares of Kennametal Inc., which makes metal-cutting tools and highway construction equipment, dropped 12 percent Thursday after the company issued a disappointing fiscal first-quarter forecast amid weaker market conditions in North America and higher raw material costs.
For the three months ending in September, the company expects earnings of 50 cents to 55 cents per share, below the 61 cents per share that analysts polled by Thomson Financial are expecting. Kennametal forecast earnings of $3 to $3.15 per share for the year, compared with analysts' average $3.10 estimate.
The company also posted a decline in its fiscal fourth-quarter profit, hurt by restructuring and asset impairment charges.
Kennametal said it expects "continued but more moderate top-line growth during fiscal 2009" amid the economic slowdown in North America.
Goldman Sachs analyst Terry Darling, who rates the company "Neutral," called the company's full-year outlook "uninspiring."
For the three months ended June 30, Kennametal earned $59.6 million, or 77 cents per share, down 4 percent from $62.1 million, or 79 cents per share, in the same period a year earlier. Adjusted earnings were 85 cents per share for the latest quarter.
Sales rose 15 percent to $753 million from $657.5 million.
Analysts, on average, were expecting a profit of 84 cents a share, excluding items, on sales of $732.4 million.
For the full year, the company earned $167.8 million, or $2.15 per share, down from a profit of $174.2 million, or $2.22 per share a year earlier. Revenue rose to $2.71 billion from $2.39 billion.
Shares fell $4.11, or 12.3 percent, to $29.43 in afternoon trading. The stock has traded between $26 and $45.60 in the past 52 weeks.
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