Fastenal's Q2 sales drop 21 percent

Fastener distributor cites continued weakness in its industrial production and non-residential construction businesses

Victoria Fraza Kickham -- Industrial Distribution, 7/14/2009 11:18:16 AM EDT

Winona, Minn.-based fastener and general-line MRO distributor Fastenal posted a 21.4 percent drop in sales and a nearly 43 percent drop in earnings in the second quarter ended June 30. The distributor said the ongoing weak economy continues to negatively affect sales, particularly in its industrial production business and, more recently, in its non-residential construction business.

Fastenal's sales for the quarter were $474.9 million compared with $604.2 million in the second quarter of 2008. Net earnings were $43.5 million compared with $76.2 million in the second quarter of 2008.

Sales for the six months ended June 30 were down 17.6 percent to $964.2 million compared with $1.2 billion in the first six months of 2008. Net earnings fell 36 percent to $92.2 million compared with $144.3 million in the first half of 2008.

The distributor said its manufacturing business continues to suffer, though more so on the industrial production side-in which Fastenal sells products that become part of a customer's finished product-than on the maintenance side. Its manufacturing business contracted 28 percent in the second quarter while its non-residential construction business declined roughly 23 percent. Fastenal's remaining business-to resellers, government and its store-based retail business-is producing better results, the company said.

Fastenal opened 42 new stores in the first six months of this year, a nearly 2 percent increase since the end of 2008. The distributor slowed its new-store opening rate to 2 percent to 5 percent for 2009, but expects to resume its normal 7 percent to 10 percent store opening rate starting in January. The company has also stopped adding personnel, except for new store openings and for stores that our growing. In all, Fastenal says it has 8.5 percent fewer employees than it did at the end of December and 4.6 percent fewer employees than it did a year ago.