Aug. 1--The recession and the slumping energy markets hit Graham Corp. hard, slashing the Batavia manufacturer's first-quarter profits by 38 percent.

Despite a 27 percent drop in sales as customers held back on new petrochemical and refinery projects because of the uncertainty that has settled over the energy markets as the economy has sagged, Graham said it expects to remain profitable and repeated its earlier forecast that sales this year will drop by 30 percent to 40 percent.

"The first quarter results were excellent, all things considered," said James R. Lines, Graham's president and chief executive officer, during a conference call Friday.

Graham's profits fell to $3.5 million, or 35 cents per share, during the quarter that ended in June, down from $5.7 million, or 56 cents per share, a year earlier.

The company's sales dropped to $20.1 million from $27.6 million as U. S. sales tumbled by 45 percent, offsetting a 10 percent increase in revenues from international customers.

The slumping economy was most apparent in Graham's new order bookings, which plummeted by 68 percent to $8.8 million during the first quarter, including a $3.4 million ejector system for a refinery project in China that was disclosed Friday.

The drop in bookings helped reduce the company's backlog of orders by 23 percent to $37 million.

"Customers just are not making purchase commitments at this moment," Lines said, noting that he still is encouraged in the long term because the company still is seeing a high level of quotation activity.

The rebound, when it comes, is likely to begin in the Middle East and China, Lines predicted, with a recovery in North America unlikely for another 1z to two years.

With its stock down 75 percent from its 2008 peak, Graham also extended its share repurchase program for another year. The company already has spent $2.5 million to buy back back 303,000 shares at an average price of $8.25. Graham still has authorization to repurchase nearly 700,000 additional shares.

drobinson@buffnews.com

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