Security-related services provider Brink's Co. (BCO) reported Thursday a sharp decline in second-quarter profit, reflecting decrease in both International and North American revenues. The company also announced that it intends to contribute $150 million in cash and stock to its U.S. pension fund by September 15, 2009.
For the second quarter, net income attributable to Brink's dropped to $20.3 million or $0.44 per share from $48.7 million or $1.05 per share in the previous year.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.39 per share in the second quarter. Analysts' estimates typically exclude special items.
Income from continuing operations slid 48% to $16 million or $0.34 a share from $30.7 million or $0.66 a share, mainly attributed to lower profits from international cash-in-transit operations, sustained weakness in diamond and jewelry markets, higher retirement plan expenses, higher foreign currency transaction costs and a higher effective income tax rate.
Revenues for the period decreased 6% to $751.9 million from $797.8 million in the second quarter of the prior fiscal year. Five analysts were expecting revenue of $757.89 million in the second quarter.
Organic revenue grew year-over-year by 2%, chiefly helped by higher average selling prices.
Revenue from international operations came down 6% to $530 million from $563 million, reflecting unfavorable foreign exchange rates. On a constant currency basis, international revenue was up 8%. Segment operating profit was $15 million, down from $42 million in the year-ago quarter.
Revenue in North America decreased 5% to $222 million from $235 million, as higher average selling prices were offset by lower volume. Segment operating profit, however, rose 19% to $13 million from $10.9 million, owing to higher selling prices, lower fuel expenses, lower legal settlement expenses and the reversal of long-term incentive accruals.
For the first half of fiscal 2009, net income attributable to Brink's more than halved to $43.3 million or $0.93 per share from $98.8 million or $2.14 per share last year. Income from continuing operations slipped 40% to $38.2 million or $0.82 a share from $63.6 million or $1.36 a share. Revenues dipped 7% to $1.48 billion from $1.59 billion in the same period last year.
Michael Dan, chief executive of Brink's, said, "We expect second-half results to improve from current levels, though our outlook is tempered by economic uncertainty, particularly in Europe. As a result, our full-year organic revenue growth rate is now expected to be in the low- to- middle single-digit percentage range with a segment operating margin between 7% and 7.5%."
Further, the company projected full-year capital spending to be around $185 million.
Brink's also announced that it intends to voluntary contribute $150 million to improve the funded status of its U.S. pension plan by September 15, 2009. The company said that the contribution would be comprised of about $90 million of cash with the balance consisting of new shares of its common stock.
BCO is currently trading at $27.94, down $2.26 or 7.48%, on the NYSE.
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