Harsco Wins Rail Grinder Contracts - Analyst Blog


On Tuesday, Harsco Corporation ( HSC ) declared that it has won railway track maintenance equipment orders from South Korea, China and the UK. Valued at over $20 million, these orders are expected to be ready for delivery by the beginning of 2014.

The South Korean order came from Sampyo Engineering & Construction, part of Sampyo Group. The rail grinder equipment desired by the company shall cater to the track maintenance of the Korea Train Express Line connecting Osong, Gwangju and Mokpo. This new line is due for completion in 2015.

The Chinese order was from Ningbo Rail Transit Group Co. Ltd. to provide its first 30-stone grinders which would ameliorate the operational efficiency and output of the machines. This contract marks the entry of Harsco in Ningbo, the sea-port city of the Chinese Zhejiang province.

Orders pouring in from the UK are not a new venture as the company has been dealing with the United Kingdom for ten years now. These grinder orders are nothing but an extension of their previous ties to proliferate the supply of railway maintenance equipment across the entire region.

The global reputation and unblemished goodwill of Harsco helped it earn several multi-million dollar contracts over time. The last one was awarded by Alfa Acclai Group during the second week of March this year to provide steel mill services worth $55 million.

Harsco's Rail segment has posted healthy results in the last quarter of 2011. While revenues surged 38% year over year to reach $82 million, operating margin increased to around 23% from 16% in the prior-year period.

The company averred that the strong results were primarily attributable to better shipment orders and high volume sales during the quarter. In addition, the various restructuring activities implemented by Harsco coupled with order wins make the company upbeat about yet another robust upcoming quarter in 2012.

However, Harsco's competitors are no less progressive when it comes to achieving contract wins. On March 1, 2012, TMS International Corp. ( TMS ) declared that it has been awarded two steel mill service contracts of nearly $179 million.

We continue to maintain a long-term 'Neutral' recommendation on Harsco. Also, the company carries a Zacks #3 Rank, which translates into a short-term rating of 'Hold'.

HARSCO CORP ( HSC ): Free Stock Analysis Report
TMS INTL CP-A ( TMS ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: HSC , TMS



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