Black & Decker's profit and revenue up

Towson toolmaker shows increases in 4Q and year

January 31, 2003|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

With one year of a huge restructuring program under its belt, Black & Decker Corp. reported yesterday increases in fourth-quarter and full-year revenue and profit, thanks to cost cutting and reduced capital spending at the world's largest toolmaker.

For the quarter that ended Dec. 31, the Towson-based company had net earnings of $75.7 million, or 94 cents per diluted share, which included a restructuring charge of $9.4 million related to the planned closure of a power tool plant in Easton.

That compares with a net loss of $13 million, or 16 cents a share, in the similar year-earlier period that was mainly because of a $100 million restructuring charge.

Excluding the $9.4 million charge, Black & Decker earned $85.1 million, or $1.05 per diluted share, in the quarter - beating Wall Street's expectations by 3 cents, according to an analysts' survey conducted by Zacks Investment Research Inc.

Sales rose to $1.23 billion, a 3 percent increase over $1.19 billion in 2001's fourth quarter.

For the year, Black and Decker reported net earnings of $229.7 million, or $2.84 per diluted share, more than double the $108 million, or $1.33 per share, it made in 2001. Sales rose 3 percent to $4.39 billion.

"Black and Decker had an excellent year in 2002," Nolan D. Archibald, chairman and chief executive officer, said during a conference call yesterday with analysts. "We believe that our success this year confirms that our products are market leading and sought out."

Black & Decker embarked on a restructuring program early last year to reduce jobs and move production to countries with cheaper labor. It closed three U.S. plants and plans to shut its Eastern Shore plant - with a loss of 1,300 jobs - by year's end. Production is being shifted to such countries as Mexico and the Czech Republic.

Fourth-quarter sales in the power tools and accessories division - the largest - inched up 1 percent to $898.4 million. It said its North American power tools segment achieved record full-year sales, but declined to release a specific figure. Sales in its fastening and assembly systems division increased 9 percent to $126.2 million.

But sales in its hardware and home improvement division were down 5 percent to $187 million, mainly because of Home Depot Inc.'s decision to drop Black and Decker's plumbing products east of the Rockies.

"They may have lost some shelf space at Home Depot, but they're doing better at Lowe's and Wal-Mart" and in sales to other stores, said Jim Lucas, an analyst with Janney Montgomery Scott LLC in Philadelphia.

"I think they're doing a good job in what has been a difficult environment," said Larry Horan, research director for Parker/Hunter Inc. of Pittsburgh. He said the company owed its strong North American power tools performance to "new product introductions and a decent construction environment, especially for single-family housing."

Black & Decker's restructuring, scheduled to run through next year, has exceeded expectations, the company said. It expects the program to cost $170 million and generate $100 million in annual savings by next year. The program generated net savings of about $25 million last year, the company said.

The company managed to reduce expenses and capital spending, which helped boost its free cash flow at the end of last year to a record $360 million, compared with $257 million in 2001. Archibald said the company will use the cash to invest in its growth, such as acquiring smaller competitors, repurchasing stock and reducing debt.

It expects to post diluted earnings per share of 40 cents to 45 cents in the first quarter this year, and earnings per share of $3.45 to $3.65 for the year.

Shares of Black & Decker lost $1.09 yesterday to close at $36.31.

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