Black & Decker's earnings surge 35%

Third-quarter benefits from cost-cutting and sales of new products

October 23, 2003|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Black & Decker Corp. reported a 35 percent jump in its third-quarter profit yesterday and raised its forecast for the year as sales of new products and cost-cutting boosted results.

The better-than-expected performance sent shares of Black & Decker up 6 percent, or $2.59, to $45.96 on a day when the stock market was skidding.

Net earnings in the quarter, which ended Sept. 28, were $74.4 million, or 95 cents per diluted share, compared with $54.9 million, or 68 cents per diluted share, posted for last year's third quarter, the Towson-based company said.

Excluding charges for restructuring in both years, earnings per share were $1.15 a share, up 21 percent from 95 cents a share in last year's quarter. That operating profit exceeded analysts' average estimate of $1.03 a share and the company's previous forecast of $1 to $1.05.

Sales rose 5 percent overall, 2 percent excluding foreign currency adjustments, to $1.14 billion the company said.

Black & Decker raised its profit forecast for the year by 10 cents a share to $3.97.

"As economic conditions improved, sales exceeded our expectations, particularly in our North American power tools and accessories business," where sales rose 1 percent, Nolan D. Archibald, chairman and chief executive officer, said in a statement.

U.S., sales of consumer products under the Black & Decker brand rose 3 percent to 6 percent, driven by strong sales of power tools and lawn and garden products. Sales of professional products under the DeWalt brand, including heavy-duty drills, grinders and generators, rose by a low single-digit rate.

The manufacturer's hardware and home improvement segments continued to recover. That part of the business posted an 11 percent sales increase, after home improvement chain Lowe's Cos. began carrying more Price Pfister faucets and margins on sales of Kwikset security hardware improved.

"It was a very solid quarter that exceeded expectations," said Franklin Morton, senior vice president, portfolio management for Ariel Capital Management in Chicago, which owns 2.9 million Black & Decker shares. "The company sold more product than expected, which in a difficult economy is a real accomplishment."

Morton noted that the company's margins improved and that it saved more than expected through a cost-cutting and restructuring plan unveiled early last year.

The cost-cutting, in its final phase, will enable the company to reach $120 million in annualized savings by 2005, instead of the originally targeted $100 million, Black & Decker said.

During the third quarter, Black & Decker closed a compressor plant in Johnstown, Pa., and reduced its work force in its power tools operations in the United States and Europe, including eliminating 47 jobs at its Towson headquarters through layoffs and voluntary buyouts.

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