Timken indicated that it now foresees first-quarter earnings of between $0.57 and $0.62 per share, up from a range of $0.38 to $0.43. Full-year income, meanwhile, is now projected to be between $2.05 and $2.20 per share, vs. an earlier forecast of $1.70 to $1.85.
The Canton, Ohio-based outfit admitted that it has seen a slowdown in the North American light-vehicles segment. This is hardly surprising, considering General Motors'
Timken's faith in the global market is somewhat surprising, however, given its participation in a protectionist arrangement created by federal law. The Continued Dumping and Subsidy and Offset Act (CDSOA) places duties on foreign products sold in the U.S. that are believed to be illegally subsidized or dumped. Revenue from the duties is then given to companies that claim they have been hurt by foreign practices.
According to Forbes, however, the CDSOA may not be long for this world. The World Trade Organization has already come down against it. The Bush administration and members of Congress, meanwhile, are pushing for its repeal. For Timken, the death of the CDSOA could be significant, since the law allowed for the company to receive $44.4 million after expenses. Given that Timken's net income in 2004 was $135.7 million, the disappearance of the CDSOA could be painful.
For more, see: "Timken: A Load of Value?"
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.