(Updates with comments from an interview with the company's
chief executive, and recent stock price.)
DOW JONES NEWSWIRES
Newell Rubbermaid Inc.'s (NWL) third-quarter profit surged 54%,
as product-line exits, lower costs and price hikes boosted margins
despite continuing weak demand.
The consumer-goods maker again raised its 2009 earnings
forecast, this time to $1.27 to $1.32 a share from $1.15 to $1.30.
The company also reaffirmed its sales forecast.
In the latest quarter the company's core sales - which exclude
acquisitions, divestitures and foreign-exchange impact - fell 10%.
That decline was worse than the 8% drop in the second quarter.
Newell's shares were recently down 7% to $13.81. In an interview
Chief Executive Mark Ketchum said the company expects a sequential
improvement in core sales starting with the fourth quarter and
continues to expect gross margins to improve. The company expects
an improvement in consumer spending next year, he said, but that
may be more tilted to the later half of the year.
Newell Rubbermaid also sees fourth-quarter earnings of 23 cents
to 28 cents and sales down 2% to 4%. Analysts were looking a
27-cent profit and a 5% revenue decline to $1.38 billion.
Newell Rubbermaid responded to the economic decline by slashing
production and jobs. But in July, crediting its cost controls, the
company said it would be able to resume marketing spending and
targeted an increase of $40 million to $50 million from the first
half to the second half.
The company - whose brands include storage products, Sharpie
pens, and Calphalon cookware - said profit soared to $85.5 million,
or 28 cents a share, from $55 million, or 20 cents a share, a year
earlier. Excluding restructuring and other costs, earnings rose to
38 cents from 35 cents.
Net sales dropped 18% to $1.45 billion, with 6 percentage points
of the decline coming from planned product-line exits and 2
percentage points from currency changes.
The company in July projected earnings of 25 cents to 35 cents
and a net sales decline in the "high teens" on a percentage basis,
below analysts' then-estimates.
Gross margin rose to 37.4% from 32.6% amid the cost cutting as
well as product-lineup changes and easing commodities prices.
- By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com
(Anjali Cordeiro contributed to this article)