CANTON, Ohio -- The Timken Co. said Thursday its third-quarter net income fell 27 percent, hurt by an industrywide slowdown in demand in Asia and Europe.
The Canton Ohio-based maker of transmissions and bearings cut its full year earnings and revenue outlook because of lower demand.
"As the quarter unfolded, the fragile global economy and declining market sector demand began to impact our business," CEO James Griffith said.
Still, Griffith said Timken maintained double-digit operating margins and predicted a rebound in 2013. Shares of Timken rose 6 percent.
The company said the industries that it makes products for have become more cautious. But Griffith added that Timken had the right plan in place to offset weak demand, cutting production until demand increases.
"We are making appropriate adjustments, including curtailing production schedules and carefully managing cash and expenses," Griffith said.
And Timken executives pointed out the company's gross margin _ the amount of each dollar in revenue a company actually keeps _ rose slightly to 26.2 percent. Griffith predicted demand would return in 2013.
"We expect to see a rebound in demand in 2013 that, coupled with our ongoing efforts to reduce fixed costs and increase operating efficiency, should position us to deliver both sales and earnings comparable to our results in 2012," Griffith said in a call with investors.
Net income for the three months ended Sept. 30 fell to $80.9 million, or 83 cents per share, from $111 million, or $1.12 per share, last year.
Excluding expenses related to closing a plant, earnings totaled 92 cents per share, just short of the 93 cents per share analysts expected, according to FactSet.
Revenue fell 14 percent to $1.14 billion from $1.32 billion a year ago. Analyst expected $1.24 billion.
Looking forward, the company expects lower shipments to many of its global markets in the fourth quarter.
It now expects full year earnings of $4.75 to $4.95 per share on a revenue decline of 3 percent to 5 percent, implying revenue of $4.91 billion to $5.02 billion. That's down from its previous forecast of earnings of $5 to $5.30 per share on a slight revenue increase
Analysts expect earnings of $4.77 on revenue of $5.25 billion.
Shares rose $2.37, or 6.5 percent, to $38.98 in afternoon trading. The stock had been down about 5 percent since the beginning of the year.