Hamilton Beach 2007 Annual Report Download - page 10

cost structure while maintaining and improving product and
service quality. Programs aimed at achieving this objective
include new, more comprehensive manufacturing improvements
and cost reduction activities, an extensive quality assurance
initiative, an aggressive global procurement program and a
new global IT organization initiative.
Market success requires the ability to provide lift trucks
appropriate for a wide range of end-user needs at competitive
prices. NMHG has, for the last few years, been developing what
it believes is the most flexible product line in the industry,
enabling the company to configure lift trucks cost effectively for
individual end-user requirements. The company’s 1 to 8 ton
internal combustion engine product line represents the core of
this new approach, and other new product lines following this
approach will begin rolling out in 2008 and 2009. Central to
this strategy are a new product development process, a multi-
year plan for new product introductions and a strategic pricing
optimization project. These programs are delivering a more
focused product offering for all global markets with what the
company believes to be the right performance, features and
price. NMHG is also taking steps to strengthen its Hyster®
and Yale® brand names worldwide.
Because sales and service needs of lift truck customers are
intensifying, NMHG is focused on attaining a level of account
management excellence unmatched in the industry. Several
projects in place involve enhancing national and global account
capabilities, improving many aspects of dealer structure and
performance, adding new aftermarket services and enhancing
the parts offerings for Hyster®, Yale® and other brands of lift
trucks. Programs have also been put in place to improve the
long-term financial performance of NMHG’s owned retail
operations, particularly in Australia.
The important North American market contracted in
2007, as anticipated, and is expected to contract again in 2008,
along with other markets in the Americas. The company is
hopeful sales of new products in 2008, as well as strong overseas
markets, will offset the effect of declines in the Americas
market, ultimately leading to modestly increased volumes
and market share.
Overall, NMHG’s results are expected to improve
gradually over time as NMHG approaches its financial targets.
However, if U.S. economic conditions deteriorate more than
expected, sales of units and higher-margin parts could decline
in 2008, which would adversely affect revenues and profit
margins. The ongoing launch of newly designed lift trucks is
expected to drive performance improvements, although the
company expects to incur expenses associated with product
launches, restructuring of the manufacturing locations and
continued material cost increases. In addition, results in 2008
could be negatively affected if year end 2007 unfavorable
currency exchange rates persist. While some programs are
expected to favorably affect results in 2008, the full impact
of certain programs, such as the transfer of the 2 to 3.5 ton
internal combustion engine lift trucks from Craigavon,
Northern Ireland, to Berea, Kentucky, is not expected until
2009. Substantial progress toward minimum financial targets
is expected from 2009 through 2012. In addition, strong cash
flow before financing activities is anticipated in the future.
Hamilton Beach Brands
HBB remains an industry leader, with strong market
positions and financial performance. HBB also has excellent
potential in an industry in which many other companies
struggle financially.
NACCO has consistently maintained a long-term perspective with respect to its subsidiary companies, which is reflected in four guiding
principles:
• Ensure highly professional management teams;
• Attain industry-leading operational effectiveness and efficiencies;
• Build industry-leading market positions; and
• Create sustainable competitive advantage positions.
In support of these guiding principles and to enhance stockholder value, NACCO provides oversight and consulting services to its subsidiary
companies. Further information on these oversight and consulting roles, as well as on NACCO’s strong corporate governance program, is outlined
in a publication entitled CEO Perspectives, which is available on the NACCO website, www.nacco.com.
NACCO Continues to Maintain a Long-Term Perspective
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