B&D earns 55 cents a share in 1Q, up from 41 cents

Toolmaker's profit beats analysts' estimate by 12 cents

April 25, 2003|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Helped by big gains in operating margins, Black & Decker Corp. reported yesterday a 32 percent increase in profit for the first quarter.

Net income at the world's largest maker of power tools rose to $43.4 million, or 55 cents per diluted share, for the quarter that ended March 30. The Towson company earned $33 million, or 41 cents per share, in the first quarter last year.

The company's results outstripped a consensus estimate of 43 cents per share in a survey of 13 analysts by Thomson First Call.

Black & Decker said that a broad restructuring program begun last year to remain competitive with foreign rivals delivered positive results in the quarter. The program includes the transfer of production from the United States to countries with lower costs, such as Mexico and China.

It plans to complete the closure of its Easton plant on the Eastern Shore - resulting in a loss of 1,300 jobs - by November, a company spokeswoman said yesterday.

Black & Decker expects the program to generate annual savings of $100 million by the end of next year, according to its earnings release. Last year, it saved $25 million.

"The bottom line is [it was] a very impressive quarter, considering the economic headwinds they're facing," said Eric Bosshard, research director for Midwest Research, an equity research firm in Cleveland.

"There's a great deal of offshore competition," Bosshard said. "Black & Decker has significantly improved its profitability by lowering its production costs - that was one of the highlights of the quarter. They fell short of revenue expectations, but exceeded earnings expectations largely because of the cost-reduction efforts."

Net income increased despite nearly flat sales in the quarter. Including the impact of foreign exchange, sales rose 1.7 percent to $968.2 million compared with $951.7 million in the last year's first quarter. Excluding the impact of foreign exchange, sales decreased 3 percent, the company reported. The company warned in early April that sales would be lower than expected.

The company reported a slight 0.8 percent decline at the largest of its three divisions, power tools and accessories, according to its earnings release. It saw a 14 percent sales decline in its hardware and home improvement division, and a 2.6 percent increase in its fastening and assembly systems segment.

Sales of Black & Decker's consumer products in the United States grew at a "double-digit rate," driven by demand for new products, said Nolan D. Archibald, Black & Decker's chairman and chief executive officer, in a statement yesterday.

"Despite a very weak global economic environment during the quarter, we were able to grow sales in both our U.S. consumer power tools and accessories division and our fastening and assembly systems segment," he said.

Among the company's popular new products he mentioned were the Grass Hog automatic-feed trimmer/edger and the Bulls Eye laser level and stud finder.

The company's hardware and home improvement segment took a hit last year when Home Depot Inc. decided to drop Black & Decker's Price Pfister plumbing products line at most of its stores. But yesterday, Black & Decker announced that Lowe's Cos. Inc. would increase its Price Pfister product listings at its home improvement stores by about 75 percent.

"We will get a large part of [the lost Home Depot business] back through Lowe's," Michael D. Mangan, the company's chief financial officer, told analysts in a conference call.

Shares of Black & Decker rose 25 cents yesterday to close at $38.61 on the New York Stock Exchange.

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