The underlying performance of Alamo Group's European division showed resilience in the face of softening market conditions last year.
Expressed in local currency, revenues from core products — mostly tractor-mounted flail reach mowers — increased 14% for the full year, 6% in the final quarter. In Dollar terms, due to the shift in currency values, the figures are less impressive: 7% up for the full year, 18% down for the final quarter.
Figures for Alamo's North American agricultural business were not as firm — 2% down for the full year, a sobering 15% down in the final quarter, when the effects of acquisitions and a write-down of the division's goodwill are excluded.
The latter led to a $5 million non-cash impairment charge that effectively reduced all the division's goodwill to zero — a necessary action, says Alamo, in light of not only current conditions, but also the uncertainty as to the outlook for the economy in general.
Net sales for the group as a whole, with contributions from 2007 U.S. acquisition of Henke and 2008 European acquisition Rivard included, shakeout as follows: $122.5 million compared to $126.3 million in the final quarter of 2007; a record $557.1 million for the full year, vs. $504.4 million in 2007.
Net income for the year was $11 million or $1.11 per diluted share compared to 2007 figures of $12.4 million or $1.24 per diluted share.
If the effect of the $5 million goodwill impairment charge is excluded, net income for the year works out at $15.5 million or $1.56 per diluted share, another record for the company.
"Our company made a lot of progress in 2008, as indicated by the record sales and profits, and despite the negative effects from raw material costs, exchange rates, agricultural commodity prices and many other factors," says Ron Robinson, Alamo Group president & CEO. "No doubt 2009 will be another challenging year but we believe Alamo Group is in good shape."
Robinson said the company is working with its vendors to control costs, adjusting the workforce to current demand levels, constraining capital spending and, among other actions, focusing on debt reduction.