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Shares plunge $1.02 to $16.53 in quarter
By Mark Clothier
Bloomberg News
Published on Friday, Aug 01, 2008
Newell Rubbermaid Inc. said Thursday that second-quarter profit dropped 35 percent and it forecast earnings that could fall below analysts' estimates because costs for fuel and plastic rose.
Newell shares sank the most since April, dropping $1.02 to $16.53. Shares are down 35.3 percent, including reinvested dividends, from a year ago and 34.9 percent in 2008.
The company said net income declined to $92.5 million, or 33 cents a share, from $142.2 million, or 51 cents, a year earlier.
The company, which has operations on Gilchrist Road in Akron, forecast third-quarter profit of 31 cents to 35 cents a share, as much as 10 cents less than the average estimate of analysts. Sales gains at Newell's office products and tools units trailed total revenue growth.
''Those two segments are in the cross hairs of the slowing economy and sluggish consumer,'' said Joe Altobello, an analyst for Oppenheimer & Co. ''They are very dependent on housing and white-collar employment, and those two areas are struggling.''
Chief Executive Mark Ketchum said last month he will sell or exit product lines accounting for about $500 million in annual sales to lessen the impact of oil on earnings.
Sales gained 7.8 percent to
$1.83 billion. Revenue at the company's office products unit, which includes Rolodex organizers, rose 4.3 percent to $612.9 million. The tools and hardware division, which sells Irwin Vise-Grips, recorded a decline of less than 1 percent to $322.3 million.
Sales at the unit that sells Rubbermaid commercial mop buckets rose 12 percent to $609.9 million, while the home and family division, which includes Goody brushes, recorded a sales increase of 18 percent to $280 million.
Excluding some costs, second-quarter profit was 49 cents a share, 1 cent more than the average estimate of nine analysts surveyed by Bloomberg News The company reaffirmed that 2008 profit will drop to $1.40 to $1.60 a share, excluding some items, from $1.82 a year earlier. In April, Newell forecast annual earnings of $1.80 to $1.90 on that basis after predicting $1.95 to $2 in January. Analysts surveyed by Bloomberg estimate an average $1.51 for the year.
Newell Rubbermaid Inc. said Thursday that second-quarter profit dropped 35 percent and it forecast earnings that could fall below analysts' estimates because costs for fuel and plastic rose.
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