Log In | Register
CHICAGO — Consumer products maker Newell Rubbermaid Inc. said its cost-cutting helped it beat Wall Street forecasts during the first quarter, and it maintained its profit forecasts for the year, news that sent the company's shares to an almost five-month high.
The maker of Sharpie pens and Rubbermaid storage containers — like many consumer products companies — has clamped down on expenses because of falling sales, brought on because shoppers are buying fewer products amid of fears about the recession and rising unemployment. Meanwhile, stores are cutting their inventory so as not to have shelves filled with products they can't sell.
The Atlanta-based manufacturer, which also makes cookware, baby products and hardware, earned $33.7 million, or 12 cents per share for the period that ended March 31. That's down 41 percent from $56.9 million, or 20 cents per share, from the same period a year before.
Excluding one-time items of restructuring costs and impairment charges , the company's profit in the latest quarter amounted to 20 cents per share.
Sales slipped 16 percent to $1.2 billion from $1.43 billion, a drop within the range given in the company's recent forecast that revenue would fall by a percentage in the mid to high teens.
Analysts surveyed by Thomson Reuters, who generally exclude one-time items, on average expected profit of 8 cents per share on sales of $1.19 billion.
The company was also helped by falling commodities prices and a decision last year to stop producing some less-profitable products. Meanwhile, Newell Rubbermaid has also worked to manage debt, saying it expects to be able to fund its debt maturities.
SunTrust Robinson Humphrey analyst William Chappell told investors the results showed a "light at the end of the tunnel."
"It would seem the fog is lifting," Chappell wrote in a research note.
Newell Rubbermaid, which announced in December that it would cut its salaried work force 8 percent or 10 percent, reaffirmed its outlook for a full-year profit in 2009 of $1 to $1.25 per share. It still expects sales to drop 10 percent to 15 percent, which would imply revenue of $5.5 billion to $5.82 billion. The company had sales of $6.47 billion in 2008.
Analysts forecast 2009 net income of $1 per share on revenue of $5.61 billion.
For the second quarter, Newell Rubbermaid forecast profit of 30 cents to 37 cents per share. Revenue is expected to decline approximately 20 percent, implying sales of about $1.47 billion. The company reported revenue of $1.83 billion in the year-ago period.
Analysts expect second-quarter earnings of 33 cents per share on sales of $1.51 billion.
President and Chief Executive Mark Ketchum told investors the company has "contingency plans" — including possible job cuts — if sales fall more than expected. But he said the company also plans to increase marketing campaigns if sales unexpectedly improve along with the economy.
"I'm not predicting an upside yet," he said of the economy during an interview with The Associated Press. "I think there are some signs that it may be bottomed, but we're not expecting to rebound quickly. We don't see it in the immediate term getting worse, but I'm also not predicting it's going to be better."
Newell Rubbermaid shares climbed $1.78, or 20.5 percent, to $10.45 in trading Thursday.
___
On the Net:
http://www.newellrubbermaid.com
___
AP Retail Writer Michelle Chapman in New York contributed to this report.
