Black & Decker Corp.'s first-quarter profit plunged 93 percent as a weak economy hurt sales of its power tools and other products much worse than it had anticipated.
Executives at the Towson-based company don't believe the economy will improve any time soon, saying they expect sales to decline just as much in the second quarter as the first three months of the year. The company also lowered its outlook for the year.
The company on Thursday reported earnings for the quarter that ended March 29 of $4.9 million, or 8 cents per diluted share. That was compared with $67.4 million, or $1.08 per diluted share, for the first quarter of last year.
The earnings reflect pretax restructuring charges of $11.9 million for 2009, and $18.3 million for 2008. Excluding these charges, first-quarter net earnings per diluted share were 22 cents for 2009 and $1.28 for 2008.
Despite the decline, Wall Street pushed shares of the company up 8 percent to close at $35.61 yesterday. Shares are down 47 percent from a year ago.
Sales decreased 28 percent for the quarter to $1.1 billion, including a negative 5 percent impact from foreign currency translation.
The company was hit particularly hard by slower European sales and a decline in demand for its fastening and assembly systems. Sales to the automotive industry declined 40 percent. But company officials said the slowdown has been felt across the company.
"All the sectors are down and have gone through some cataclysmic changes," Chief Financial Officer Stephen F. Reeves said during a call with analysts.
Black & Decker will continue to focus on reducing costs to deal with sales declines, although company officials declined to give details. In January, the company said it was cutting 1,200 jobs. Last month it announced it was trimming salaries and suspending 401(k) matches for U.S. employees. Beginning this month, base salaries of top executives were cut by 10 percent, salaried employees by 5 percent, and salaried workers who qualify for overtime by 2.5 percent.
The company said it expects earnings of $1.50 to $1.90 a share for the year, down from a previous forecast of $1.75 to $2.25 per share. It expects revenue to drop 20 percent.