Hamilton Beach 2009 Annual Report Download - page 6

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Introduction
The global recession made 2009 very
challenging for NACCO Industries, Inc. and
its subsidiaries, particularly in the first half
of the year. NACCO’s lift truck business
faced extraordinarily depressed markets
worldwide. Consumer goods markets were
well below earlier peak levels. And while
lignite mining markets remained steady, the
limerock mining markets in Florida were
extremely depressed.
Given these market conditions,
consolidated revenues for NACCO
decreased substantially in 2009 to $2.3
billion compared with $3.7 billion in 2008.
As a result, NACCO Materials Handling
Group (“NMHG”) had a significant loss in
2009 as its revenue declined 48 percent
because global lift truck markets remained
very weak for the entire year. However, at
Hamilton Beach Brands (“HBB”), despite
a decrease in revenues, operating results
were exceptional. Kitchen Collection also
experienced a promising turnaround in
2009, reporting significantly improved
results. North American Coal (“NACoal”)
had an excellent year with improved
results. Overall, we implemented
aggressive actions in 2009 to combat the
recession and made sound progress on
our key improvement programs.
Economic and market conditions
appeared to stabilize in the second half of
2009, with some isolated signs of limited
recovery beginning to emerge. The forklift
truck market appears to have stabilized at
the end of 2009, but at very depressed
levels in NMHG’s largest markets. These
depressed levels are expected to continue
into 2010. NACCO continues to operate
on the assumption that the global lift truck
markets will not improve significantly in
the first half of 2010, and is cautiously
optimistic a moderate recovery in that
market will begin in the second half. The
consumer goods markets appear to be
recovering, although consumers continue
to struggle with high unemployment rates
and lower income levels. The lignite
market is expected to remain stable, and
the limerock market in South Florida is
expected to continue to be depressed by the
weak housing and construction markets.
Aggressive cost containment actions, such
as reduced employee salaries and benefits
and spending and travel restrictions,
remain in effect at NMHG and NACCO
headquarters, and will be phased back in
only as NMHG’s financial results permit.
At the consumer products subsidiaries,
employee-related benefit programs
suspended at the beginning of 2009 were
partially phased back in during the fourth
quarter of 2009 and have been fully
reinstated in 2010.
NACCO and its subsidiaries continue
to be financially secure. In 2009, NACoal
refinanced its credit agreement on favorable
terms. Each of the other subsidiaries
currently has attractive financing in place.
Further, each of NACCO’s subsidiaries
generated extraordinary cash flow before
financing activities in 2009, with
Consolidated NACCO in total generating
$180.1 million. We will continue to focus
on maximizing cash flow before financing
activities in 2010, although levels lower
than in 2009 are expected because 2009’s
significant reductions in working capital
are not expected to reoccur.
NACCO continues to have flexibility
in capitalizing its subsidiaries, an option
To Our Stockholders