A Message from the CEO
Despite a tough third quarter, Hammond Power Solutions Inc. (“HPS”) is certain of an upturn in the remaining quarter of the year.
Quarter 3, 2016 results were impacted by a much slower economic environment than expected in the United States (“U.S.”) and Europe. It has become very clear that the U.S. Presidential election has generated considerable uncertainty in the U.S., our largest market. Several key customers have delayed projects into the next quarter, which reduced our planned shipments. The slow global economy continues to weigh on exports as well as commodity markets. Sales of manufactured cores from our joint venture, Corefficient S. de R.L. de C.V. (“Corefficient”) have been lower than planned, however we are forecasting stronger sales and improved margins from this new venture in 2017.
We are pleased to report that booking levels during the third quarter were higher than a year ago, especially in the U.S. and India. Quotation activity remains strong, and non-resource related activity at the consultant level is the highest in years. There are also a number of sizable industrial projects which must be shipped by the end of the year. In addition, we have been able to hold our margins in a very competitive market. Looking forward, the outcome of the U.S. election will have an impact on the confidence and investment in that country. We are hopeful however that this outcome will be positive and we can get this year of political, trade and economic uncertainty behind us. Until then, we are taking full advantage of our diversity in geography, channels, markets and products to grow our sales where possible and anticipate better times ahead.
We are engaged in a number of projects to expand our sales over the coming year, while constantly working on a range of cost reductions to help improve our margins in this very competitive environment. These are indeed volatile times where we must be mindful of both opportunities and risk that are in front of us and remain ready to respond to unexpected changes in our environment.
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