Hamilton Beach 2013 Annual Report Download - page 6

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INTRODUCTION
Just over a year ago NACCO Industries Inc.
completed a significant transformation in its business
through the spin-off of its Hyster-Yale forklift truck
business and its entry into the bituminous and
metallurgical coal business in Alabama. Since
then, NACCO has remained
focused on key strategic initiatives
for its North American Coal
Corporation (“NACoal”) and
Hamilton Beach Brands (“HBB”)
subsidiaries and on realigning
its Kitchen Collection business to
compete profitably in the current
traditional and outlet mall retail
environment.
Coal deliveries from NACoal’s
lignite mines increased in 2013
as more electrical demand at its
customers’ power plants translated
into higher customer requirements
and the Company benefited from
a full year of deliveries from its
Reed Minerals (“Reed”) operation,
which was acquired in August 2012. However, as
a result of a downturn in the metallurgical coal
market, a decrease in metallurgical coal prices to levels
moderately below the Company’s expectations and
short-term cost challenges, tons delivered, revenues
and profits at Reed did not achieve the Company’s
expectations for its first full year of ownership.
Limerock customers increased requirements as a
result of significant demand related primarily to one
large project in the Florida construction market that
ended during the second half of 2013.
Middle-market mass consumers, which are
HBB’s and Kitchen Collection’s target customers,
remained under pressure in
2013. Customer visits to stores,
particularly at traditional and
outlet malls, continued to drop
in 2013, especially during the
fourth-quarter holiday selling
season. Despite this highly
challenging environment,
revenues and profits improved
at HBB as a result of increased
placements and promotions at its
largest customers. On the other
hand, Kitchen Collection, which
continued to make adjustments
to attract customers, was not
able to overcome the unfavorable
effect of the decline in customer
visits to its stores.
Given these conditions, 2013 was a challenging
year for NACCO Industries, Inc. While consolidated
revenues for NACCO grew to $932.7 million in 2013
from $873.4 million in 2012, primarily due to increased
deliveries at NACoal and higher sales volumes of
higher-priced and new products at HBB, consolidated
income from continuing operations increased only
MINING
TOOUR STOCKHOLDERS
SUBSIDIARY LONG-TERM
FINANCIAL OBJECTIVES:
• NACoal: Earn a minimum return on
capital employed of 13 percent, attain
positive Economic Value Income from
all existing consolidated mining opera-
tions and any new projects, maintain or
increase the profitability of all existing
unconsolidated mining operations and
achieve substantial income growth by
developing new mining ventures.
• HBB: Achieve a minimum operating
profit margin of 10 percent.
• Kitchen Collection: Achieve a minimum
operating profit margin of 5 percent.
• All businesses: Generate substantial
cash flow before financing activities.