Black & Decker's earnings tumble 31% Blame the taxman and SnakeLight sales

April 19, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

Black & Decker Corp.'s quarterly earnings dropped 31 percent, largely because of lower sales of its SnakeLight flexible flashlight and a higher tax rate, the company said yesterday. But the decline was not as steep as analysts had expected, and the outlook not as gloomy. Investors sent Black & Decker shares up $2.25 to $32.125.

Net income for the company's first quarter, which ended March 30, was $26.3 million -- down from $38 million in the year-ago period. On a per-share basis, earnings fell to 27 cents from 39 cents.

`Our results were consistent with the outlook we described last December, which anticipated negative comparisons to the first quarter of 1996," said Nolan D. Archibald, chairman and chief executive officer of the Towson-based maker of power tools, accessories and household products.

R. Bentley Offutt, an analyst for Hunt Valley-based Offutt Securities, said the company beat his expectation of about 25 cents a share. Based on the company's warning last year of a difficult quarter, Offutt said, he had believed that Black & Decker would face a 40 percent tax rate -- up from the 27 percent enjoyed last year because of tax credits. But the rate ended up at 35 percent, because of foreign tax credits, he said.

Yesterday, Offutt predicted that declining SnakeLight sales will hurt earnings in the second quarter, but that launches of new lines of corded power tools and DeWalt bench and stationary tools will boost third- and fourth-quarter earnings.

"The company will exceed their earnings of last year despite the difficult first quarter and maybe a flat second quarter," Offutt said.

For the first quarter, the earnings decline was only 24 percent when the comparison excluded nonrecurring items from the year-ago period. Those items included an after-tax gain of $70.4 million on the sale of PRC Inc. and an after-tax restructuring charge of $67.0 million. Sales for the quarter decreased 5 percent, to $1.01 billion from $1.06 billion.

In a statement, Archibald said sales of professional power tools, accessories and fastening systems remained strong, but other businesses were flat because of tough competition and weak European economies.

He said positive customer reaction to new products "confirms our belief that sales growth will accelerate and operating margins will improve in the second half of the year." He also said the company anticipates benefits worth about $40 million during the year from a European restructuring.

Pub Date: 4/19/97

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.