Hamilton Beach 2007 Annual Report Download - page 13

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expected to dramatically affect mining volume and NACoal’s
performance in 2008. Over time, further profitability
improvements depend on power plant uptime, coal delivery
levels and performance improvements at the Mississippi
Lignite Mining Company, on increased mining volume at Red
River Mining Company and on the state of the housing and
construction markets in Florida for the limerock dragline
mining operations. More importantly, the company hopes to
undertake several new mining projects over the next few years,
which could add significantly to NACoal’s profitability in the
longer term. Cash flow before financing activities is
expected to continue to be very strong.
NACCO Outlook
In summary, the Company has
well-thought-out profit enhancement
and growth programs at each of its
subsidiary companies, and NACCO is
encouraged by the progress achieved
to date. However, external factors,
such as an uncertain U.S. economy,
material cost increases, the effects of
adverse movements in currency
exchange rates and weakening consumer retail markets, have
required adjustments to our programs and the anticipated
timing of achieving target profitability. Although each
subsidiary will be placing extra focus on current programs and
will certainly develop new programs to address any worsening
economic downturn, it will be a very challenging year for
NACCO and it will be difficult to sustain 2007 performance in
2008. It is our hope that as improvement programs mature and
markets improve, performance will be enhanced significantly
in 2009 and beyond. Along with this improved profitability, we
expect strong returns on total capital employed.
NACCO is optimistic about its prospects to generate
strong net income in the long term and anticipates generating
significant cash flow before financing activities. These funds
could be used to fund new coal projects, reduce subsidiary debt
levels or pursue other strategic opportunities of long-term
benefit to the Company and its stockholders. The Company
has also approved a program to use available NACCO funds to
purchase NACCO stock, an action authorized by the Board of
Directors in late 2007.
NACCO’s share price was $81.05 at the close of the
financial markets on February 29, 2008. The stock market
has been very volatile in the last year, especially for small-
capitalization stocks. While we are very disappointed the
share price performance of the last two years was not
sustained, considerable work has been completed to improve
and strengthen each subsidiary. By clearly articulating our
understanding of the industries in which we compete and by
successfully executing our profit improvement and growth
programs, we are hopeful the Company will receive further
enhanced valuation in the future.
On the cover of this Annual
Report, we state that we are “managing
for long-term profit growth.” Those
are not just words, but a philosophy
that affects our decision-making day
in and day out. Rather than create
programs for obvious short-term
gain, we take the long-term view
when developing strategies and
implementing tactics. Backed by
strong corporate governance, we
continually invest in efficiency, quality,
innovation, building strong brands and developing lasting
customer relationships. We will make no exception to that
approach in 2008 and beyond. As we work to achieve truly
breakthrough performance in all of our subsidiaries, we will
work equally hard to guard against potential declines. For those
reasons, we believe NACCO Industries represents an excellent
investment opportunity.
Finally, I would like to thank all NACCO stockholders for
their continued support and all NACCO employees for their
hard work and commitment in meeting the challenges of 2007.
I look forward to a successful 2008.
NACCO’s subsidiaries
continually invest in
efficiency, quality,
innovation, building strong
brands & developing lasting
customer relationships.
Alfred M. Rankin, Jr.
Chairman, President and Chief Executive Officer
NACCO Industries, Inc.