Barnes Group Inc. officials say tariffs are having minimal impact for the company, which reported second quarter sales July 27.
Christopher Stephens, senior vice president and chief financial officer, said Barnes leaders believe the tariffs will have a $2 million impact, "primarily with our Molding Solutions and Engineered Systems businesses." That comes as Barnes generated second quarter sales companywide of $375 million, an increase of 3 percent from the second quarter of 2017, including favorable foreign currency exchange rates. Organic sales grew 1 percent.
Net profit was $49.4 million in the second quarter.
Stephens said Barnes executives have analyzed the potential effects of President Donald Trump's tariffs, including studying ways to offset higher costs. "This remains a very fluid area," he said.
Molding Solutions — which includes Synventive hot runners, rotating cube mold maker Foboha and other operations — accounts for about a third of sales in the Industrial business segment, which generated $249.6 million in sales during the second quarter, down 1 percent from the prior-year second quarter sales of $251.8 million.
Measured in organic sales — taking out currency exchange numbers — and unit sales declined 4 percent. Operating margins increased to 15.4 percent, from 15 percent in second quarter of 2017.
For the first half of 2018, Industrial segment sales increased 3.4 percent from the year-earlier first half.
Foboha, which Barnes bought in 2016, had lower profit margins, but Dempsey said he is more confident in the mold business now, despite "headwinds" in the second quarter. But he said Foboha's molds business can be "lumpy," sometimes with variations of 50 percent in orders and sales from quarter to quarter. Barnes also owns the Männer mold operation.
Both Foboha and Männer make complex multicavity molds that can turn out millions, or even billions or parts a year, Dempsey said.
"As such, there's an extremely close working relationship with the customers throughout the process, in particular in the final validation steps," he said. Customer availability to sign off on the molds, either at the mold plants or their own factories, can cause timing delays, he said.
"We have a high degree of confidence" in the molds business since "a lot of molds that we're planning on shipping through the second half of year are well into the manufacturing process," Dempsey added.
Barnes expects 2018 sales of the Industrial segment to increase in the mid-to-single digits. For Molding Solutions, the company sees favorable demand for hot runners and premium molds. Molding Solutions will focus on growing the maintenance repair and operations business and on global expansion.
Barnes' hot runners business hit record sales in 2017. Now North American softening in automotive is impacting hot runners, Dempsey said, answering an analyst's question. But automotive is solid in other parts of the world.
"We're continuing to feel positive about global auto production growing nominally. What we're seeing is a shifting of where our revenues are coming from [in] the three regions where we play a role in North America, Europe and Asia," he said.
He added that the comparisons this year are with the strong 2017 for hot runners.
"So what we see when we talk about a softening, is a little bit of a pullback from the peak, but still an overall healthy business," Dempsey said.
Barnes, based in Bristol, Conn., is traded on the New York Stock Exchange.