Quarter tops forecasts at Black & Decker

41 cents a share is reported by Towson toolmaker

April 26, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

Black & Decker Corp. reported yesterday that its first-quarter earnings were nearly flat and that sales fell slightly, but the performance still exceeded estimates.

The Towson-based toolmaker made $33 million, or 41 cents a diluted share, in the three months that ended March 31, compared with $33.1 million, or 40 cents a diluted share, in the first quarter of 2001. Sales were down 1 percent, to $951.7 million from $962 million.

In January the company told analysts to expect first-quarter earnings of 30 cents to 35 cents. On average, analysts were expecting earnings of 34 cents, according to Zacks Investment Research.

"We always like to place ourselves in a position where we don't disappoint," Nolan D. Archibald, chairman and chief executive, told analysts earlier in the year.

During the quarter, the toolmaker generated free cash flow of $43 million compared with a use of $112 million in the year-earlier period. In another positive sign, the company's inventory level was $704 million -- $174 million less than it was at the end of last year's first quarter.

"I thought [the earnings] were very good," said Eric Bosshard, an analyst at Midwest Research. "The business challenge in a weak economy is to focus on cost structures and inventory levels so when the market strengthens you can make money, and they've done a great job at taking costs out and keeping inventories down."

Sales in the power tools and accessories segment were up 0.8 percent to $640 million, and the segment's profit was up 9 percent to $38 million.

The hardware and home improvement segment saw its sales climb a modest 0.86 percent to $199 million with a decline in profit of 12 percent to $15.4 million.

Sales rose 2.5 percent to $123 million in the fastening and assembly systems segment. Profit in that division was down 17 percent to $16 million.

Black & Decker said it is moving ahead on its plan to restructure its manufacturing operations. The company announced earlier this year that it would cut more than one-third of its work force, or about 450 jobs, at its Eastern Shore plant in Maryland. It is cutting an additional 2,000 jobs worldwide as it moves production to countries where labor is cheaper.

"The restructuring plan that we announced in January is on track to generate over $60 million of cost savings in 2003," Archibald said in a statement. "In the first quarter, we closed an accessories plant in the United States and transferred several products to our facility in Mexico, as planned."

Shares of Black & Decker rose 80 cents to $48.40 yesterday.

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