John Crane to buy EG&G's industrial seals business

John Crane to buy EG&G's industrial seals business

I I ISSUE 25 JANUARY 1998 ISSN 1359-6128 JOHN CRANE TO BUY EG&G’S INDUSTRIAL SEALS BUSINESS John Crane Group, part of TI Group, is to acquire the b...

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ISSUE 25 JANUARY 1998 ISSN 1359-6128

JOHN CRANE TO BUY EG&G’S INDUSTRIAL SEALS BUSINESS John Crane Group, part of TI Group, is to acquire the business and assets of EG&G Inc’s Seal01 Industrial Seals Division for US$lOO million. At the same time, EG&G will pay US$4.5 million for the Bclfab Division of John Crane lnc, the Daytona Beach unit of the TI Group that produces specialty bellows devices for the semiconductor, aerospace and biomedical industries. The net consideration of US$55 million will be paid in cash. The transactions are subject to regulatory and other approvals, including those of the respective boards of directors, and are expected to close in early 1998. EG&G’s Sealol Industrial Seals Division, headquartered in Cranston, Rhode Island and employing 750 people, manufactures mechanical seals used by the chemical, petrochemical and other industries. In 1996, the division had sales of US$SS.S million, operating profits of US$10.3 million and net assets of US$22.8 million. Belfab, which was bought by TI in 1991 for US$14.3 milCONTENTS COMPANY DIARY

lion, is a supplier of specialised metal bellows to the semiconductor industry, with 75 per cent of its sales going to this market. Based in Florida, it employs 240 people and had 1996 sales of US$27.0 million, operating profits of US$4.6 million and net assets of US$S.O million. TI Group, the global specialised engineering company, is quoted on the London Stock Exchange. Headquartered in the UK, TI employs 27 000 people at more than 350 manufacturing and customer facilities located in 45 countries, and in 1996 had sales of &I .8 billion, The John Crane Group specialises in engineered sealing systems for process, marine and general industrial markets, Commenting on the announcement, Sir Christopher Lewinton, chairman of TI Group, said: “We at TI are pleased with these transactions. We head into 1998 with John Crane Mechanical Seals in a strong position with record order books. It is anticipated that the acquisition of Sealol will contribute to accelerating the revenue and profit GENERAL

growth for the mechanical seals business. While we have been very pleased with the performance of Belfab, it is a highly specialised product line serving the semiconductor industry, which is not coherent with John Crane’s global strategy in mechanical seals.”

TI Group’s long-awaited bolt-on acquisition comes interestingly in the form of EGCG’s Seal01 Industrial Seals Division. In buying Sealol, John Crane will get access to some world-leading technology in mechanical seals for the oil refinand petroleum ing, chemicals industries, while John Crane’s global presence should help Sealol internationally, expand reducing its dependence on the domestic market. The deal firmly cements John Crane’s leading position in the fluid sealing sector. For John Crane, the acquisition will effectively remove a competitor, buy more market share and broaden its technology base. As well as softening the purchase price of Sealol, the divestment of Belfab helps to sharpen the focus of John Crane’s activities, removing bellows manufacturing. ??

NEWS 1,12,13,16 MARKET




APV TO CLOSE EASTBOURNE PUMP PLANT As part of a group-wide programme to rationalise its manufacture and assembly facilities, APV is to close its Eastbourne and Derby operations. The Eastbourne facility manufactures a range of positive displacement pumps, while the Derby facility offers sales, assembly and service of heat exchangers and fluid handling equipment. The work carried out at these two sites will be moved to the company’s facilities in Crawley and to some of APV’s larger manufacturing plants in Europe. The APV Howard Pumps factory in Eastbourne is expected to close during the first half of 1998. The decision coincides with the completion of development of a new range of pumps, replacing the range currently made at Eastbourne. A spokesperson for APV said it was with regret that the decision had to be taken to wind down manufacturing at Eastbourne. The decision was not taken lightly and the management recognises the skills and experience of the \vorkforce at Eastbourne. The spokesperson added that ultimately, however, the age and lack of space to expand at the Eastbourne site meant that this decision had to be taken.









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January 1998

Pump Industry Analyst

MEXICAN REFINERY GETS US$2.5 BILLION IMPROVEMENTS The Mexican state-owned Petroleas Mexicanos (PEMEX) refinery at Cadereyta in the North of Mexico, is to receive the world’s most extensive upgrading and extension. The mammoth US$2.5 billion project is scheduled for completion in the year 2000, after which it will have the capacity to produce nearly 200 000 barrels of unleaded gasoline, diesel and kerosene each day. The projects include the construction of nine new plants,.including a hydrodesulphurised diesel and naptha producing plant and a 480 ton per day sulphur recovery plant. Fourteen other plants, including a refinery producing 155 000 barrels per day of fuel and a 65 000 barrels per day fluidised catalytic cracking plant, will be revamped, modemised and expanded. Simultaneously, four sets of steam boilers, 50 tanks, a refinery plant organised into 29 different units and a 1300 km pipeline will be constructed and integrated. The contract to update the refinery has been awarded to an international consortium led by the South Korean industrial and building systems company Sunkyong, partnered by the German company Siemens and the Mexican construction company Grupo Tribasa.

CHEVRON TO DOUBLE UP IN NIGERIA Chevron has announced it is approximately to spend US$llO million to nearly double the capacity of its Escravos gas processing facility in Nigeria. The newly-commissioned project, which is operated by

its wholly-owned subsidiary, Chevron Nigeria Ltd (CNL), in association with the Nigerian National Petroleum Corp (NNPC), will be extended to produce 240 million cubic feet of gas and nearly 17 000 barrels of liquid products a day. The second phase of production is expected to come onstream in late 1999, only two years after the plant exported its first cargo of liquefied petroleum gas (LPG). The Escravos gas project is part of joint efforts by CNL and NNPC to commercialise natural gas produced in association with oil production in Chevron’s Nigerian operations. Prior to the construction of the Escravos plant, gas had been flared at each production site. “The Escravos project is the boldest initiative to end gas flaring in Nigeria. Chevron and the NNPC embarked on this project because of its positive environmental ramifications as well as benefits to its economic Nigeria,” said Dick Matzke, president of Chevron Overseas Petroleum.

PETRO-CANADA DETAILS INVESTMENT PLANS Petro-Canada, the Canadian oil and gas company, is approximately to spend US$1.13 billion in its 1998 capital investment program. A confident Jim Stanford, president and CEO spelt out intentions. the company’s “Petro-Canada’s capital investments in the coming year will result in significant progress towards our goal of becoming the pre-eminent Canadian integrated oil and gas company,” he said. Exploration and developwill expenditures ment account for approximately one-third of the budget, with 300 new oil wells already planned for Western Canada.

NewfoundThe existing land offshore fields will be developed further with US$300 million, including the drilling of at least nine wells at the Hibemia field. The company plans to bring a major new oil field on stream every two to three years. ApproxUS$280 million imately will be invested in the downstream processes, including US$25 million to expand the the catalytic cracker at Montreal refinery.

GEORGIAN LIQUID NATURAL GAS PEAKING PLANT A new US$90 million liqueRed natural gas peaking facility will he serving the South-Eastern United States by the 2001-02 winter season. AGL Resources zat Southern Natural Company, a subsidiary of Sonat lnc, have entered into a letter of intent to jointly construct, own and operate the Etowah plant in Polk County, Georgia, US. Construction will begin in 1999, and when completed the plant will have 3 billion cubic feet of natural gas storage capacity and 450 million cubic feet per day of vaporisation capacity.

FURTHER SUCCESS FOR SYNTROLEUM Syntroleum Corporation’s novel gas-to-liquid (GTL) process is to he used in a commercial scale plant for the first time. The 2500 barrel per day plant will convert natural gas into light and heavy syncrude, which can be further processed into petroleum products. The proposed plant is to be built outside the United States, at a location to be announced during the first quarter of this year. Purchase orders are to be

issued in the near term for items that could impact on the plant’s scheduled start-up in the third .quarter of 1999. Syntroleum has signed an agreement to develop the plant with Texaco and the engineering company Brown & Root. The plant will incorporate the new hybrid multiphase technology (HMX) FischerTropsch reactor that has been developed under a joint development agreement between Texaco and Syntroleum, with technical support from Brown &Root and Bateman engineering. “We expect that this will be the world’s first economical GTL plant,” said Mark Agee, Syntroleum’s president and CEO.

CARRINGTON TO DOUBLE PRODUCTION AT COSTA RICA PLANT Carrington Laboratories Inc, the research company, has announced plans to increase production at its hulk manufacturing plant in Liberia, Costa Rica. Over the last 12 months, the company has experienced a 45 per cent growth in the demand for raw materials containing natural complex carbohydrates. The carbohydrates, obtained from Aloe vera L, are used in the production of nutritional drinks. The first phase of the production increase will be the installation of a high speed filling line, scheduled for completion in the first quarter of 1998. The second phase of the planned increase will involve the acquisition and development of additional production facilities. Currently, the company has more than 190 acres under production, and anticipates the need for an added 200 to 250 acres.

January 1998

VENEZUELAN BREWERY OPENS A new state-of-the-art US$lSO million brewery, featuring the world’s largest bottling line, has opened in Venezuela. The new facility, located 1OOkm from Caracas, has an initial annual brewing capacity of 1.4 million hectolitres, which will grow to 3 million hectolitres by the year 2000. The brewery is the first major initiative of the joint venture between Interbrew, the multinational brewing group, and the Cisneros Group, which Caracas-based owns the Regional Brewing Company. “The new brewery is truly state-of-the-art combining the best in technology with traditional brewing practices,” said Powell, CEO of Hugo lnterbrew in the Americas.

BHP COAL EXPANSIONS PROCEEDING Contrary to some recent reports, the planned expanBroken Hill sions to Proprietary (BHP) Company Ltd’s mines in Queensland, Australia are ongoing. It had been reported that the proposed plans to expand the Peak Downs and Saraji mines had been cancelled, which BHP has denied. However, BHP Coal is reviewing the scope and timetable of the expansions, including the timing of some parts of the investment. BHP is currently reviewing capital plans across all of its operations in line with market conditions, and to ensure that financial targets are met. However, the A$50 million expansion of the Hay Point port facility is proceeding on schedule, as an integral part of the company’s

Pump Industry Analyst

plans to meet requirements.

new capacity

FEASIBILITY STUDY FOR QATAR SMELTER The Norwegian company Norsk Hydro and the stateowned Qatar General Petroleum Corporation have signed an agreement that clarifies the conditions for the establishment of an aluminium smelter in Qatar. The project is subject to further studies to determine its viability and profitability and, depending on the results, a metal plant in Qatar could start production during 2002. The feasibility study is considering two alternative plant sizes: one with an annual production capacity of 200 000 tonnes of primary aluminium, and a second which would produce double that. The estimated total investment costs for the smaller option are approximately US$l billion. The plant would be located in the Ras Laffan industrial city, near the tip of the Qatari peninsula. “Qatar provides us with solid infrastructure, reliable and competitive energy and excellent logistics in terms of the growing markets in Asia,” said Harald Martinsen, of Hydro Aluminium Metal Products.

CHINESE COMPLEX CONSIDERED Alcan Aluminium Limited and China National Non-ferrous Metals Industry Corp (CNNC) have announced that they are considering developing an aluminium smelter and power complex at Hejin City, China. The two companies have signed a memorandum of understanding to complete a

detailed feasibility study of the proposed project. The smelter would produce 240 000 tonnes of aluminum per year, and take 12-I 8 months to complete. The project has received the consent of all relevant government departments and has been approved by the State Planning Commission of the People’s Republic of China, following a pre-feasibility successful study.

SINGAPORE ETHYLENE PLANT PROCEEDS The 800 000 tonne per year ethylene plant that the Kellogg-Chiyoda alliance is developing for Exxon in Singapore has progressed the detail design into and equipment procurement phase. The world scale plant is part of the US$2 billion Exxon petrochemical complex to be located on Jurong Island and is the first major project of the ethylene technology alliance of the MW Kellogg engineering company and the Japanese engineering company Chiyoda. The plant is scheduled to come onstream in 2000 and will supply feedstock for several major downstream chemical plants. In addition to the ethylene plant, Kellogg and Chiyoda will work together on the detailed design and construction of a partial oxidation unit and an associated co-generation facility.

WEST AUSTRALIA NAMES PLANT SHORTLIST The Western Australia State Government has shortlisted six potential developers of a proposed A$l.S billion petrochemical project.

The Pilbara Petrochemical Plant (PPP) will be based on ethane contained in natural gas from an associated gas project, and will produce more than A$1 billion worth of products each year. The shortlisted developers are: BP Chemicals, a unit of British Petroleum Co; South Korea’s Hanwha Chemical Corp; Samsung General Chemicals Co; ICI Australia Ltd; Krupp Group and a joint venture between Dow Chemical Co and Shell International Chemicals Ltd, a unit of Royal Dutch/Shell Group. “We will be looking to these companies to develop a world scale integrated petrochemical project with interdependent links to add-on chemical projects,” said Western Australia resources development minister Colin Barnett. The preferred developer is expected to be announced in the coming months.

MTBE PLANT FOR SAUDI ARABIA The world’s largest grassroots MTBE (methyl tertiary butyl ether) plant is to be built in Yanbu, Saudi Arabia. Neste, the Finnish oil, energy and chemicals company, the Saudi company Alujain Corp and Ecofuel of Italy have signed a joint venture agreement to develop the plant. Costing in the region of US$400 million, the plant is expected to have a record capacity of 900 000 tons a year when it is completed in 2000. MTBE is a high octane, oxygen rich gasoline component used in cleaner gasolines.

NAPTHA CRACKER IN PHILIPPINES Bataan Oleiln and Polymer Corporation (BOPC) have announced plans for a grassroots naptha cracker at Bataan in the Phillippines.

January 1998

Pump Industry Analyst

The new plant will be the anchor unit for a developing industrial complex and will supply feedstock to polypropylene, polyethylene and other petrochemical plants located nearby. The cracker is expected to be onstream by early 2001. BOPC development partners include Sumitomo Mitsubishi Carp, Carp, Kellogg Development Corp and Prolinda Holdings.

BASF CONTINUES EXPANSIONS The BASF group has announced plans for a new plant in Korea and further expansions to its chemical plants, at a variety of locations. BASF Korea Ltd, a fully owned affiliate of BASF AC, and Mitsubishi Chemical Corp have signed an agreement for the construction of a 1,4butanediol and tetrahydrofuran production plant. The plant, with a capacity of 50 000 metric tons per year, will be constructed in Wlsan, Korea and will go onstream in 1999. This new development is accompanied by investment in some of BASF’s existing European plants. The production capacity for butylamines at Ludwigshafen, Germany is to be increased by 5000 metric tons per year, doubling the total capacity when the expansion is complete by the third quarter of 1999. “This expansion is to the growa reaction ing demand for amines worldwide,” said Dr Dietrich Lath, head of BASF’s intermediates division. Further expansion is also planned at its ethanolamine plant at Antwerp, Belgium, with capacity being increased by 35 000 metric tons a year. This expansion should be completed by mid1999, and will raise the annual production of the plant to 85 000 tons per year.

HERCULES ADDS CAPACITY IN HOLLAND Hercules Inc, the chemical company, has announced a US$6 million investment at its resins plant in Middelburg, the Netherlands. The investment will enable the construction of a centrally located dispersion unit which will add capacity and introduce advanced process and product technology. The new unit should be operational by early 1999. ‘The new facility in Middleburg will allow us to expand our leadership position in Europe and the US and to take advantage of emerging markets,” said R Keith Elliott, chairman and CEO.

BP ENTERS NEW MARKET BP Chemicals is to enter the market for 1,4global butanediol (BDO) with a new production plant. The preferred site is BP’s existing chemical complex in Lima, Ohio, US, and final approval for construction, predicted to start by the end of 1998, will be based on further studies. Initial capacity will be 140 million pounds per year, with additional infrastructure in place to allow ease of expansion to 260 million pounds. The plant, scheduled for start-up in 2000, will be based on new technology developed by BP and the German company Lurgi OlGas-Chemie. “BDO is a growing business that will need new capacity using the best, most cost efficient technology,” said Gary Greve, president of BP Chemicals.

MOD0 INVESTS IN QUALITY The Swedish pulp and paper company MoDo is to invest

SKrl.2 billion in measures to improve product quality. MoDo Paper will invest some SKr300 million in its fine paper and pulp operations, including a biological treatment plant at the Pont Sainte Maxence paper mill in France. Holmen Paper, which produces newsprint and magazine paper, is receiving SKr500 million, of which SKr200 million will be spent on the modemisation of a paper machine at the mill, newsprint Braviken Sweden. The input of high quality pulp to a similar paper machine at the Hallsta paper mill, Sweden, will also be improved with a SKr90 million project.

POTLATCH EXPANDS PLANT WITH US$62 MILLION Potlatch, the diversified forest products company, has announced a significant expansion to its oriented strand board (OSB) plant at Cook, Minnesota, US. The US$62 million investment will increase the Cook plant capacity to 435 million square feet per year, from the current 244 million square feet. “This project reflects Potlatch’s commitment to make all operations low-cost producers and emphasises our confidence in the long term profitability of OSB,” noted John Richards, chairman and CEO.

TWO SIEMENS POWER PLANTS FOR AUSTRALIA Siemens has been awarded two contracts for power in Queensland, stations Australia.

The first plant, to be built at Oakey, for Oakey Power Holdings Pty Ltd. is a 300MW gas turbine plant. It will be powered by either natural gas or diesel and is scheduled to start commercial operation in January 2000. The second gas turbine power station will be Townsville for built at Transfield Townsville Pty Ltd. It is scheduled for start-up in December 1998 and will have a capacity of 150MW. This smaller plant will be powered by jet fuel until natural gas is available at the plant. The combined value of both projects is around DM210 million.

WORLD BANK POWERS UP ETHIOPIA Bank has The World approved a US$200 million equivalent credit for an energy development project in Ethiopia. The money will help improve the efficiency and sustainability of Ethiopia’s power sector through institutional capacity building, rural energy development and the construction of a hydroelectric power plant along the Gilgel Gibe River.

CONSTRUCTION BEGINS ON GUATEMALA PLANT Construction is scheduled to begin this month on a US$181 million coal-fired power station in Guatemala, the first of its kind in Central America. TECO Power Services, the and a Coastal Corp Guatemalan company are set to commence work on the 120MW San Jose Power Project, near San Jose on the Pacific coast of Guatemala. It is scheduled for completion by the first quarter of 2000.

January 1998

Pump Industry Analyst

The Grundfos Group Profile Grundfos manufactures and sells pumps for a wide range of water-related applications. The group is a leading supplier of circulation pumps for central heating systems and also produces submersible and centrifugal pumps for domestic water supply, wastewater treatment and light industry. In the past financial year, over eight million Grundfos pumps were produced and sold, in over 30 countries world-wide. Outlook At DKr6682 million, the group’s turnover is up 15.5 per cent against the previous year, whilst the acquisition of the Italian group INTERDAB has contributed to an organic growth of 9 per cent. This growth has been evident in all of the geographical regions, but the largest expansions were in Northern, Central and Eastern Europe and in the Asia-Pacific region. The growth in the new democracies of Eastern Europe has accelerated particularly rapidly, and the establishment of regional sales companies has made this the group’s strongest area of expansion. Growth targets in the markets of Germany and the UK were achieved, despite the difficult conditions, though it will be interesting to see if this continues, with Germany’s continuing economic problems. Grundfos has had a record year in the sale of circulation pumps, gaining a biggest ever market share for this product group. In fact, growth has been achieved in all of its main product groups, reflecting its continuing

investment in R&D, particularly into high technology. Extraordinary costs of DKr41 million, although lower than last year’s DKr77 million, again negatively affected the year’s earnings. These costs have primarily been incurred through the restructuring of the Group’s European production and sales companies, which should secure the Group’s ability to compete in the future.

Another positive year for Grundfos, which has contributed to the increasingly strong position the group holds in the global market. An increasing R&D budget and a commendable concern for environmental issues should ensure they continue expanding in their major markets and improving their wide range of products. ??

Key Figures Year ended 30.4 (DKr million)

Net Turnover Operating






















Fixed Asset investment






Research & Development












Profit after Tax

Number of Employees Contact Details Group Chairman and President:

Niels Due Jensen


Poul Due Jensens Vej 7 DK-8850 Bjerringbro Denmark

Tel: +45 87 50 50 50 Fax:+45875051 51 Website:

Recent Events ??

The Danish subsidiary has been divided into an R&D division and seven factory divisions.


New sales companies


Total Quality Management,


Grundfos acquired the Italian pump group INTERDAB (see Pump Industry Analyst, September




have been started in Hungary, New Zealand and the Czech Republic.

of components

with constant self evaluation, was introduced in all production companies

in Autumn 1996.


and product assembly began at a new factory in China at the end of 1996.

The BIRAL Group, Switzerland early 1997.

sold its electro-motor

factory RCB Motorenbau

AG to Smedegaard

Pump of Denmark in

January 1998

Pump Industry Analyst

North Limited Profile North Limited is an Australian diversified resources group. It operates mines in Australia, Canada and Sweden, has extensive forestry operations and manufactures pumps through its wholly owned subsidiary, Warman International. Warman designs, manufactures and markets slurry pumps for the mining, mineral, processing and manufacturing industries. Outlook North continued its steady rate of global expansion in 19960997, with a 20.6 per cent growth in net profit, up to A$135 million. This result was largely underpinned by a corresponding 35.4 per cent increase in sales revenue, up from A51082 million to A51465 million. Warman International, North’s pump interest, also reported encouraging results for the year. A 9.2 per cent growth in sales was achieved through Warman’s aggressive marketing strategy, with a significant increase in new pumps sold during the year, though there were lower sales of spare parts. Sales into all of Warman’s markets, with the exception of Western Europe, were strong. Warman increased its capital expenditure for the year to A520.5 million, spending the bulk of this on upgrading equipment and expanding its marketing resources. The order book is up 8 per cent’ on the previous year and significant supply Key Figures North Limited

contracts have been received. The improved sales are expected to lead to an increase in support services and spare parts revenue in future years. Warman remains committed to increasing its manufacturing capacity and a number of potential capacity expansions are currently being assessed.

Warman continues to perform well for North Ltd, even if it could not match last year’s record contribution to group earnings. Increased orders and after-saIe services should guarantee future revenue and, if completed, the potential capacity expansions being assessed are likely to lead to increased growth in most areas. m

Year ended 30.6 (A$ million) 1997










Operating Profit before Abnormal Items

















Sales Revenue

Profit before Tax

Operating Profit after Tax and Minority Interests Warman


Sales Contribution

to Earnings

Capital Expenditure Depreciation



































and Amortisation

Total Assets Employees Contact

Year ended 30.6 (A$ million)



Chairman: Michael Deeley Head Office Address:

Recent ??

North House 476 St Kilda Road Melbourne Victoria 3004 Australia

Tel: +61 3 9207 5111 Fax: +61 3 9250 1600 Website:


Warman was the successful bidder for the pump equipment contract for the Olympic Dam Expansion project in South Australia. The contract involves the delivery of more than 100 pumps over the next 12 months.

January 1998

Pump Industry Analyst

Robbins & Myers Inc, USA

Cameo International Inc, USA

Key Figures (US$ million)’ First quarter ended 30.11

Net Sales Income before Income Taxes Net Income Income Per Share: Primary Fully Diluted Unfilled Orders

Key Figures (US$ million)’ Third quarter ended 30.9









US$O.69 US$O.62

US$O.58 US$O.53







Cost of Sales



Net Income






Net Earnings per Share

l Except per share data.

Nine months ended 30.9 1997





Cost of Sales







Net Income Net Earnings per Share 1 Except per share data.

Daniel Duval, president and chief executive officer of Robbins & Myers Inc has cited a variety of reasons for the strong first quarter figures quoted here. First quarter sales have risen by 11 per cent to US$104.2 million and net income is up 26 per cent to US$8.2 said, million. Duval “Continued improvement in our operating performance is driven by balanced revenues due to our broad line of fluids management products, the diversity of served markets, geographic dispersion of our manufacturing and aftermarket sales pene-

tration.” Robbins & Myers manufactures a range of products on an international scale. The company has facilities in the US, Canada, Europe, Brazil, Mexico and Singapore and joint ventures in China India and Taiwan. Industries served by its products include pharmaceuticals, oil and gas recovery, wastewater treatment and mining. Duval singled out the glasslined vessels and oilfield production business units as particularly performing well and predicted a solid year for revenues and eamings growth. W

Cameo’s results reflect the continuing strength of the markets for its products and the benefits of operating on a global scale. This quarter’s net income of US$27 million represents a 55 per cent increase compared with the same quarter in 1996. Sales were also up, an increase of 28 per cent on the previous year. Each of Cameo’s operating groups made a significant contribution to the quarter’s results, but Reda’s electric submersible pumps division was the most impressive with a 40 per cent jump in revenues. The

results were also aided by a reduction in selling, general and administrative expenses, down to 22.7 per cent of total revenues, from 24.5 per cent in 1996. The results over the nine month period also show rises in sales and net income, 23 per cent and 32 per cent respectively, including a significant amount of revenue from non-US markets. Cameo believes that these intemational markets hold the biggest growth potential for their products and services, which are largely concerned with oiltield equipment. ??

January 1998

Pump Industry Analyst

Kubota Corp, Japan

Baker Hughes Inc, USA

Key Figures (u million)’ Six months ended 30.9

Key Figures (US$ million)’ Fourth quarter ended 30.9







Cost of Sales



218 979




358 765

386 833

Net Income/(Loss)



25 701

30 122

Capital Expenditures


_____ 50.6

13 830

Net Income/(Loss) per Share



Net Sales Of Which: Industrial Products and Engineering

203 170

Cost of Sales Operating


Net Income Net Income per 20 Common and Common Equivalent Shares

486 108



517 384


Year ended 30.9

Sri 80

’ Except per share data.






Cost of Sales













Net Income Capital Expenditures Net Income per Share ’ Except per share data.

Declining pump sales were indicative of a difficult year for Kubota Corp. Sluggish sales in a variety of other markets also contributed to a 6 per cent decrease in net sales for the six month period. Along with a decrease in net sales, consolidated income also declined 14.7 per cent. Despite increased sales of pump-incorporated facilities for sewage systems, total pump sales decreased as a result of lower sales of mainstay largesized pumps to the public sector, a principal market.

This contributed to a decline in sales in the Industrial Products and Engineering sector, down 7.2 per cent to Y203.2 billion. Overseas sales rose 14.7 per cent from the corresponding period in 1996, and as a result 2 1.8 per cent of all sales were from outside of Japan. Kubota aims to respond to the continuing challenging conditions quickly and flexibly, while improving its performance, achieving stable growth and building a stronger business structure. ??

1997 was a year of growth and transition for Baker Hughes Inc (BHI), which provides products and services for the oil, gas and process industries. BHI invested over US$l billion in acquisitions, capital expenditures, business initiatives and research and development during the year. This investment, including the acquisition of KHD, the environmental technology division of Deutz, has impacted on the revenue and profits for the fourth quarter. Excluding acquisitions, revenues reached record levels for

both the quarter and the year. Process equipment revenues were US$l27.4 million for the fourth quarter, compared with US$lO7.7 million for a year ago. However, weak sales to the pulp and paper sales meant that, exclusive of acquisitions, revenue for the process companies actually fell 12 per cent. With the tinalisation of the acquisition of ODI from Franklin Electric (see Pump Industry Analyst, November 1997) BHI’s Centrilift consolidated its position in the worldwide electric submersible pumps market. ??