US’ Donaldson posts gross margin of 34.1% in Q4 FY23
September 04, 2023 - United States Of America
The gross margin of Donaldson Company, a global leader in technology-led filtration products and solutions, in the fourth quarter (Q4) of fiscal 2023 (FY23) was 34.1 per cent, up 130 basis points from 32.8 per cent in 2022 driven by pricing benefits and the stabilisation of input costs. Adjusted gross margin, which excludes the impact from restructuring and other charges, was 34.3 per cent, an increase from 32.9 per cent in 2022.
Sales decreased 1.2 per cent to $879.5 million from $890.0 million in 2022, due to volume declines partially offset by pricing benefits. Mobile Solutions segment (Mobile) sales decreased 4.8 per cent, resulting from volume declines. Aftermarket sales fell 6.7 per cent as large OEM customers continue to normalise inventories in response to improving global supply chain conditions. Off-Road sales fell 0.4 per cent from weaker market demand in the Americas and China. On-Road sales rose 5.5 per cent driven by elevated levels of global equipment production.
Industrial Solutions segment (Industrial) sales increased 9.9 per cent in the second quarter, supported by strong global demand and price realisation. Industrial Filtration Solutions (IFS) sales grew 10.8 per cent from power generation project timing and robust dust collection sales. Aerospace and Defense sales increased 4.3 per cent due to strength in defense. Life Sciences segment sales in the second quarter decreased 11.9 per cent year over year as continued disk drive market softness and customer inventory normalisation negatively impacted results. Acquisitions added 340 basis points of growth versus 2022, the company said in a press release.
“Fiscal 2023 was a milestone year as Donaldson delivered record sales and earnings, while also improving margins and investing for future profitable growth,” said Tod Carpenter, chairman, president and chief executive officer. “Our employees demonstrated tremendous resilience and dedication as we redesigned the Company to increase customer focus and efficiency. In the fourth quarter, we continued to strengthen our foundation and made investments in key strategic growth areas, including the Life Sciences segment with our acquisition of Univercells Technologies, to drive Donaldson to the next stage of its evolution.
“We remain focused on executing our balanced growth strategy, strengthening our leadership in legacy markets and expanding across new markets as we provide innovative, technology-led filtration solutions for our customers. While we look to fiscal 2024 as a year of ongoing investments, critical to achieving our long-term financial targets, we are also committed to continuing our best-in-class execution, ongoing R&D initiatives, and the scaling of our acquisitions. As such, we are forecasting another year of record sales, and record earnings and operating margin,” explained Carpenter.