Graco posts lower sales in industrial segment in Q1 2019

Minneapolis Minnesota — Graco, which manufactures polyurethane spray machinery, had total sales of $405m in the first quarter of 2019, down very slightly, by 0.3%, on the equivalent period in 2018.

Gross profit across the business fell 2.7%, and reached $216m in the first quarter of 2019.

Patrick McHale, Graco's CEO, said: 'On a constant currency basis, the company achieved low single digit organic sales growth. This was below our expectations, but we remain cautiously optimistic regarding the balance of the year.'

Polyurethane machinery is located in the company's industrial business; this had sales which fell 3.1% between Q1 2018 and Q1 2019. They reached $189 m in the Q1 2019 period. This compares with $195 m in the previous period.

Gross profit across in the division fell 5.5%, at $65.3m, in the first quarter of 2019.

Graco said that in the segment, growth in the Americas and EMEA was offset by a decrease in Asia Pacific. That region included the sale of large systems in the first quarter of 2018. Those sales did not repeat in 2019. Currency translation drove a decrease in operating margin as a percentage of sales. Gross margin and operating expenses were flat at consistent currency translation rates.

Overall, the company said sales were down slightly across the business. There was a 5% sales increase in the Americas. This was offset by falls of 2%in EMEA, and 12% in the Asia Pacific.

In Asia Pacific, increases in the company's process and contractor segment sales partially offset a decrease in industrial segment sales.

Changes in currency translation rates hit worldwide sales and operating earnings by around $11m, taking 2% off the sales numbers. Currencies took 5% of the operating earnings numbers, said the company.