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28 Textron Inc. Annual Report ● 2012
Industrial segment revenues increased $115 million, 4%, in 2012, compared with 2011. Higher volume resulted from a $93
million increase in the Fuel Systems and Functional Components product line, reflecting higher automotive industry demand in
North America, and a $78 million increase in the Other Industrial product lines, largely related to higher market demand in the
Golf, Turf Care and Light Transportation Vehicles product line. The unfavorable foreign exchange impact was mostly related to
the weakening of the euro, which primarily impacted the Fuel Systems and Functional Components product line.
Operating expenses for the Industrial segment increased $102 million, 4%, in 2012, compared with 2011, largely due to $130
million in higher direct material costs in support of higher sales volume. In 2012, operating expenses were also impacted by cost
inflation of $44 million, primarily due to higher material and overhead costs, partially offset by lower costs due to a favorable
foreign exchange impact of $70 million resulting from the weakening of the euro.
Factors contributing to the 2011 year-over-year revenue change are provided below:
(In millions)
2011 versus
2010
Volume $ 138
Foreign exchange 77
Acquisitions, net of dispositions 18
Other 28
Total change $ 261
Industrial segment revenues increased $261 million, 10%, in 2011 from 2010. Volume increased and mix improved largely due to
a $117 million increase in the Fuel Systems and Functional Components product line, reflecting higher automotive industry
demand, and $21 million in the Other Industrial product lines, largely related to the Powered Tools, Testing and Measurement
Equipment product line reflecting higher sales in North America and Europe. The favorable foreign exchange impact was
primarily related to strengthening of the euro, which mostly impacted the Fuel Systems and Functional Components product line.
Higher Other Industrial revenues of $78 million included a $27 million impact from acquisitions and improved pricing of $20
million, in addition to the higher volume.
Operating expenses for the Industrial segment increased $221 million, 9%, in 2011, compared with 2010, primarily due to a $115
million increase in direct material costs due to higher sales volume, a $68 million impact from foreign exchange related to
strengthening of the euro, and $40 million in inflation for direct materials related to various commodity and material components
throughout the segment.
Industrial Segment Profit
Factors contributing to 2012 year-over-year segment profit change are provided below:
(In millions)
2012 versus
2011
Volume $ 31
Inflation, net of pricing (17)
Other (1)
Total change $ 13
Segment profit for the Industrial segment increased $13 million, 6%, in 2012, compared with 2011, primarily due to the impact
from higher volume as described above, partially offset by cost inflation that exceeded related price increases.
Factors contributing to 2011 year-over-year segment profit change are provided below:
(In millions)
2011 versus
2010
Volume $ 31
Performance 34
Inflation, net of pricing (35)
Other 10
Total change $ 40