DOW JONES NEWSWIRES
Black & Decker Corp.'s (BDK) first-quarter net income
plunged 93% as a continued steep sales slide walloped the bottom
line.
The toolmaker and home-improvement products company also cut its
full-year earnings outlook, noting the impact of the stronger
dollar and higher interest costs. The view was lowered to $1.50 to
$1.90 a share from $1.75 to $2.25.
For the second quarter, Black & Decker expects earnings of
35 cents to 45 cents a share. Analysts' mean estimate was 42 cents
a share, according to a survey by Thomson Reuters.
"We expect that the weak demand we saw in the first quarter will
continue," said Chairman and Chief Executive Nolan D.
Archibald.
He attributed the weaker-than-expected sales in the first
quarter to sharply deteriorating markets, especially in Europe and
the auto industry. Stepped-up cost-cutting, however, helped to
reduce overhead costs 23% and mitigate the sales woes somewhat.
The outlook for U.S. home-improvement products is gloomy, with
2009 product sales seen heading for their first three-year decline
since record-keeping began more than 40 years ago, according to
market researcher Global Insight.
Black & Decker booked first-quarter net income of $4.9
million, or 8 cents a share, down from $67.4 million, or $1.08 a
share a year earlier. Excluding restructuring charges, earnings
fell to 22 cents a share from $1.28.
Sales skidded 28% to $1.07 billion, with the weak dollar hurting
revenue by five percentage points.
The company in January projected earnings of 5 cents to 15 cents
a share on a 20% revenue drop, guidance which was notably short of
analysts' expectations.
Gross margin fell to 31.7% from 34.6% on the sales woes.
Sales in the U.S. industrial-products group dropped 30% amid the
construction slowdown and retailers paring back inventory as the
recession grinds on. Sales in the power tools and accessories group
fell 23%.
Shares were down 0.4% to $32.89 in premarket trading Thursday.
The stock has been halved since September.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com