B&D chief sees growth over next three years

April 27, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

Black & Decker Corp. Chief Executive Officer Nolan D. Archibald reassured stockholders yesterday that despite weaker-than-expected first-quarter results, the company projects strong earnings growth over the next three years.

Mr. Archibald said internal cost-cutting measures, asset sales to reduce debt and increased sales helped by an improving economy should allow the company to increase per-share earnings by 20 percent over the next three years and by 15 percent after that.

"Most of our domestic business and particularly power tools are doing well as the economy keeps chugging along," Mr. Archibald said during the company's annual meeting in Towson.

The upbeat tone of the meeting was in contrast with the somewhat muted announcement of Black & Decker's earnings yesterday.

The firm reported revenues of $1.08 billion in the first quarter of 1994, down 1.4 percent from $1.10 billion a year earlier, and profits of $14.6 million, or 14 cents a share, up from $13.9 million, or 13 cents a share, a year earlier. Profits were well below the consensus estimate by analysts of $18.8 million, or 18 cents a share.

The firm's stock closed at $18.75 yesterday, unchanged from a day earlier.

Mr. Archibald said a key goal would be to reduce the firm's debt, possibly by selling off the company's computer subsidiary, PRC.

The firm has also cut annual costs by $100 million over thelast two years and expects to cut a similar amount in the next two years by closing plants in Germany and South Carolina and consolidating other operations, he said.

Cost-cutting has put the firm's European operations in a position to be a major contributor to earnings growth, he said.

But not all shareholders were swayed by the company's vision.

During the question period, Margarita Petou, a shareholder from New York, asked why the firm's stock and dividend have been flat over the last few years, while Mr. Archibald's salary has increased.

She noted that he received a $650,000 bonus in 1993. "What justifies your salary?" she asked.

Mr. Archibald responded that his bonus was based on performance targets that he and the board of directors had agreed upon. Improved earnings are the only way to increase the dividend and force the stock up, he said.

"We are as frustrated and unhappy as you are about the stock price," he said.

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