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