In the first quarter of this year, IR said its revenues from the transport refrigeration sector decreased by 8%, compared to the same period in 2001, excluding the positive impact of several acquisitions. Operating margins increased from 5.2% in 2001 to 5.5% this year because of cost reductions and synergies from the integration of new companies into its Hussmann subsidiary.
However, with the North American trailer market still in decline and a 48% falloff in shipping container business, transport refrigeration revenues are expected to decrease by 12% overall compared to 2001. For the company as a whole, IR expects revenues for 2002 to be flat compared to 2001.
Although demand for new equipment continues to be impeded by used truck and trailer equipment, industry experts believe that the availability of used equipment has declined by 50% over the past 12 months, IR said. The year-over-year decline in trailer demand was less severe than expected in the first quarter, so the pricing pressure experienced over the past several quarters will likely diminish as volumes stabilize, the company added.
Stationary refrigeration revenues in the first quarter increased by 15% compared to last year, reflecting the results of Taylor Industries and National Refrigeration Services, which were acquired and added to IR's Hussmann division in the second quarter of 2001. The installation, service and parts business for this sector continues to expand, said IR, accounting for 34% of total stationary refrigeration revenues in the quarter.
On another front, IR courted national controversy after it decided to shift just its headquarters to Hamilton, Bermuda last year, cutting its U.S. taxes by over $40 million. The financial benefit of that move became apparent this quarter. While net revenues of $2.3 billion this quarter were only 1% higher than the same period in 2001, the company posted net earnings of $80.9 million, after several restructuring charges.
The company said its effective tax rate is now 20%, compared to 33% in the first quarter of 2001. Its effective tax rate for 2002 is expected to be 20% reflecting its ongoing "tax planning" initiatives, IR said, with the 20% rate sustainable in future years.