Power tools maker Black & Decker Corp. (BDK) Wednesday reported a decline in profit for the fourth quarter, hurt mainly by expenses related to the proposed merger with The Stanley Works. Although the company sees a modest improvement in many of its markets this year, it remains cautious due to ongoing pressure in some sectors, particularly the U.S. commercial construction.
Net earnings for the quarter were $33.9 million or $0.55 per share, lower than $43.7 million or $0.72 per share last year. Fourth-quarter net earnings reflected $58.8 million of pre-tax expenses related to the proposed merger with The Stanley Works in 2009 and a $20.8 million pre-tax restructuring charge in 2008.
Excluding items, net earnings were $1.24 per share, higher than $0.96 per share in the year-ago quarter.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.77 per share. Analysts' estimates typically exclude special items.
The Towson, Maryland-based company's fourth-quarter sales declined 6% to $1.30 billion from $1.38 billion in the same quarter a year earlier. Quarterly sales benefited 4% from foreign currency translation. Ten analysts estimated revenues of $1.20 billion for the quarter.
The company operates through three segments: Power Tools and Accessories, Hardware and Home Improvement, and Fastening and Assembly Systems.
Sales from Power Tools and Accessories segment dropped 11% to $909.8 million from $1.03 billion a year ago, reflecting continued weakness in both residential and commercial construction. Hardware and Home Improvement segment recorded sales of $200.7 million, down 4% from $209.0 million recorded last year. Fastening and Assembly Systems segment generated sales of $154.9 million, 2% lower than $158.4 million in the previous year.
Commenting on the results, Chairman and Chief Executive Officer Nolan Archibald said, "Sales in the quarter exceeded our expectations in all three of our business segments. While our end markets generally remain difficult, we benefited from improved economic activity in selected regions and businesses, as well as inventory restocking in some channels."
For fiscal 2009, net earnings plunged to $132.5 million or $2.17 per share from $293.6 million or $4.77 per share last year. Full-year sales were $4.78 billion, lower than $6.09 billion in the previous year. Seven analysts estimated earnings of $2.53 per share on revenues of $4.68 billion for the year.
In the preceding third quarter, Black & Decker reported a decline in net profit, hurt by weak sales across all its segments. Third-quarter net income slipped to $55.4 million or $0.91 per share from $85.8 million or $1.41 per share in the same quarter of 2008. Sales decreased 23% to $1.21 billion from $1.57 billion in the comparable quarter.
Among peers, electrical products and tools maker Cooper Industries Plc (CBE) Tuesday reported a 16% increase in profit for the fourth quarter, as lower costs and charges helped offset a 17.5% decline in revenues. Cooper's net income for the fourth quarter increased to $128.8 million or $0.76 per share from $111.1 million or $0.65 per share in the same period last year. Quarterly revenues declined 17.5% to $1.26 billion from $1.52 billion in the comparable quarter last year.
Looking ahead, Black & Decker expects a mid single-digit sales increase for the first quarter, driven by the comparison to retail inventory adjustments in 2009, and a low single-digit growth rate for the full year 2010, both including favorable currency translation.
The company also sees at least 200 basis points year-on-year improvement in operating margin for the first quarter and about 100 to 150 basis points for the full year, excluding merger-related expenses and restructuring charges. The company added that its guidance is on a stand-alone basis, excluding any impact of the proposed merger.
BDK is currently trading at $71.96 per share, up 4.67%, on the New York Stock Exchange. In the past 52-week period, shares had been trading in the range of $20.10 to $72.82.
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