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Donaldson manufactures filtration systems and replacement parts, with its product mix including air and liquid filters and exhaust and emission-control products for mobile equipment; in-plant air cleaning systems; compressed air purification systems; air intake systems for industrial gas turbines, and specialized filters for a diverse range of applications such as computer disk drives and semiconductor processing. Donaldson has two business segments, Engine Products and Industrial Product, and operates from more than 30 plants.
Donaldson reported record sales in 2006 of US$1.694 billion, up 6.2% from US$1.596 billion in the prior year. Excluding the negative impact of currency translations, sales were up 7.8%. The Engine Products division grew its share of total sales slightly, up to 58.5% compared to 57.9%, with revenues in the Industrial Products unit showing a corresponding dip from 42.1% to 41.5%. Sales in the Engine Products segment, which reached US$991.6 million, reflected North American heavy-truck build rates remaining at record levels and strong sales for off-road equipment sales worldwide. Additionally, sales of diesel emission retrofit equipment continued to ramp up throughout the year, driving aftermarket parts sales growth. In the Industrial Products segment, where revenues reached US$702.8 million, worldwide sales in gas turbine products were higher than 2005 as business conditions in that market began to strengthen, particularly in the Middle East, Asia and parts of Africa. Sales of special application products were also strong with continued demand for computer hard drives and other consumer electronics helping Donaldson's special application products sales. Rising commodity prices again impacted Donaldson during the year. Cost reduction programmes, improved production efficiencies and selective price adjustments offset these cost pressures. Gross margin of 32.9% was up from the gross margin of 31.7% in the prior year. Donaldson's net sales, also negatively impacted by currency translations, were up 19.6% at US$132.3 million.
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