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Kennametal Inc. is optimistic that the market for its industrial tool products "may moderately improve" in the first half of 2010, particularly in nations with strong economic stimulus programs, the company's chief executive said Tuesday.

The company should "realize higher profitability in an industrial upturn," CEO Carlos M. Cardoso said at the company's annual meeting at its headquarters in Unity, Westmoreland County.

While Kennametal believes that the economic downturn has hit bottom, "its magnitude leaves us cautious about predicting the speed and strength of the recovery," Cardoso said. Industrial orders are picking up slightly and Cardoso expects some recovery in the automotive business.

Like many other companies, Kennametal suffered from the global recession and financial market collapses, Cardoso said. For the fiscal year that ended June 30, Kennametal posted a loss of $119.7 million, or $1.64 per share, on sales of almost $2 billion. That compares to a profit of $167.7 million, or $2.15 a share, on sales of $2.6 billion during fiscal 2008.

Kennametal has benefited from government stimulus programs, particularly in other countries, Cardoso said. The stimulus package in China increased spending there in less than a month, he said, but in the United States, the estimated $100 million directed toward highway improvements and other infrastructure has yet to help Kennametal's business.

Cuts that removed $125 million in annual fixed costs have helped, he said. The company also saved money through temporary reductions, such as one-week furloughs and unpaid vacations earlier this year for its 12,000 employees.

Kennametal plans to announce earnings for its first quarter of fiscal 2010 on Thursday. The company's stock closed yesterday at $23.93 a share, down 79 cents or 3.2 percent.

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