DOW JONES NEWSWIRES 
 

Masco Corp.'s (MAS) second-quarter profit dropped 33% on lower sales volume, but the company managed to avoid reporting a third consecutive quarterly loss as a result of its cost-cutting efforts.

The maker of faucets, cabinets and other building products also issued an improved sales view, and said it could record a full-year profit, excluding items, based on the better-than-expected results.

Shares were up 9.5% to $12.65 in after-hours trading as results topped estimates and the company raised its full-year guidance. Masco's stock has been falling consistently from February 2007, when the stock traded near $35. Still, the value has more than tripled since March.

"Sales benefited from new product introductions and market share gains," said Chief Executive Tim Wadhams, who said Masco was also helped by improvements to its cost structure.

Masco has been hurt by a steep decline in home improvement and new home construction spending, which has hurt it throughout the recession. In response, the company has closed 19 facilities and cut its work force. And while housing starts improved in June, industry observers cautioned the housing starts could be the result of a federal tax credit, not a true indicator of health.

Masco reported earnings of $55 million, or 15 cents a share, compared with a year-earlier profit of $82 million, or 23 cents a share. The latest period included 4 cents in charges and costs related to the company's restructuring efforts, while the prior year's quarter included 3 cents in similar costs.

Revenue decreased 23% to $2.04 billion for Masco, whose product lines include Kraftmaid kitchen cabinets and Delta faucets.

Analysts polled by Thomson Reuters expected a per-share loss of a penny on revenue of $2.02 billion.

Gross margin rose to 26.8% from 26.5%.

North American revenue dropped 21%, while international sales fell 30%. International sales would have dropped 17% excluding the impact of the stronger dollar.

Looking ahead, Masco sees restructuring costs of about 15 cents a share for the year, up about 3 cents from its earlier view. The company also improved its full-year view, seeing per-share results ranging from a profit of 10 cents to a loss of 10 cents, excluding the restructuring costs, on a sales decline of about 18% to 22%. In April, it expected a loss of 2 cents to 22 cents on a sales drop of about 20% to 25%.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com