Hamilton Beach 2007 Annual Report Download - page 8

Introduction
Key profitability and growth programs in place at NACCO
Materials Handling Group (“NMHG”), Hamilton Beach Brands
(“HBB”), Kitchen Collection (“KC”) and North American Coal
(“NACoal”) delivered substantial benefits in 2007. However,
this progress was hindered by external forces, including a
slowing U.S. economy, the continued
challenges of higher material costs,
unfavorable shifts in currency
exchange rates and weakening retail
housewares markets. As a result, 2007
income before extraordinary gain,
excluding restructuring charges,
remained comparable to 2006.
Specific action plans have been
put in place to address many of the
external challenges experienced in
2007, including restructuring
programs at NMHG, so each subsidiary is in a position to
adapt quickly to changing conditions while continuing to work
toward ambitious financial goals.
We continue to believe each subsidiary’s core profitability
and growth programs, combined with longer-term market and
economic factors, will, over time, deliver improved financial
performance, particularly in 2009 and beyond.
At each subsidiary, strategies and key programs have been
established to address specific industry dynamics and trends,
with the objective of competing effectively, achieving established
financial targets and generating substantial cash flow before
financing activities. Programs to enhance profitability are
designed to achieve performance in line with minimum
financial targets, and programs to generate growth are intended
to drive long-term profit growth.
The stakes involved in executing the Company’s
profit enhancement and growth
programs remain high, particularly
at NMHG, where substantial
improvement in operating profit
margin is still required to meet
financial targets. Assuming NACCO’s
subsidiary companies had achieved at
least their minimum financial targets
in 2007, the Company would have
generated additional net income of
$126.7 million, or $15.32 in additional
diluted earnings per share, approxi-
mately 88 percent of which represents improvement at
NMHG. (See reconciliation of these non-GAAP amounts on
page 42.) In order to realize this significant potential, NMHG
continues to place an intense focus on profit improvement
programs and is expected to continue this focus in the coming
months and years.
HBB and KC were advancing toward their financial targets
until retail market conditions turned downward. The current
state of the U.S. consumer markets suggests a period of cautious
growth in the years ahead, with the possibility of a decline in
A letter from
Alfred M. Rankin, Jr.
Chairman,
President and Chief
Executive Officer of
NACCO Industries, Inc.
[4]
To Our Stockholders
Managing for long-term profit growth
Dividends Paid Per Share
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
$0. 0
$0. 5
$1. 0
$1. 5
$2. 0
$2. 5
$.595 $.615 $.635 $.655 $.675 $.710 $.743 $.773
$.810 $.850 $.890 $.930 $.970
$1.260
$1.675
$1.848 $1.905 $1.980