In an October 27 note to clients, Jefferies noted the U.S.-based industrial machinery company posted lower sales in the fiscal first quarter of 2017 of $477 million compared to an expected $482.1 million.

But Jefferies analysts noted that the company said its restructuring programme has cut 75% of the targeted workforce so far and met 65% of correlating savings identified, leaving room for further cost reductions. "We are increasing our full year outlook range, but remain generally cautious on overall year," the company said in its earnings release.

The scope for further free cash flow is high as a result, Jefferies said, maintaining a buy rating.

"We continue to view upside opportunity to earnings for KMT," Jefferies said. "With the completion of Phase 1 the new cost savings target for FY2017 is $101mln. This includes ~$35mln in savings from headcount reductions ($65mln annualized) in addition to existing initiatives. With only 75% of the headcount reduction being implemented thus far we believe there is upside to the savings targets."

APMEN Business News, Oct 2016