Sales at Kennemetal decreased by 1%, reflecting a 10% organic decline and a 1% unfavorable effect from currency exchange, partially offset by a 9% increase from Stellite and 1% from the effect of more business days.

Operating income was US$66 million, compared with US$94 million in the same quarter last year. Stellite contributed US$5 million of operating income in the current year quarter. Operating income decreased due to lower absorption of manufacturing costs related to reduced sales volume and an inventory reduction initiative, as well as an unfavorable sales mix.

"We again sustained strong performance, in both profitability and return on invested capital, despite generally lackluster activity in the global industrial markets," said Carlos Cardoso, Kennametal chairman, president and CEO. "While recovery is progressing more slowly than expected, we have kept our organization agile and ready for the resumption of growth. Our Stellite acquisition is contributing to earnings and opening us to new growth opportunities in the energy and power generation industries."