Fortune Brands Inc (FO.N) reported a
quarterly profit that topped Wall Street's lowered expectations
on Friday after the consumer products maker warned that weak
consumer sentiment, the U.S. housing slump and higher taxes
would depress earnings more than expected.
The maker of Jim Beam bourbon, Moen faucets and Titleist
golf equipment said second-quarter net profit fell 41 percent
to $136 million, or 88 cents per share, from $232 million, or
$1.48 per share, a year earlier.
The results include a $60 million charge for such items as
a write-down of the company's door business because of the
housing slowdown.
Excluding special items, earnings were $1.25 per share,
beating the analysts' average forecast of $1.20, according to
Reuters Estimates.
Fortune also affirmed its full-year earnings outlook.
But its shares, which at Thursday's close were down 19
percent this year, were nearly unchanged on Friday.
Investor enthusiasm was probably muted as weakness across
the company's portfolio drove earnings before interest and
taxes down 24 percent, according to Goldman Sachs analyst Judy
Hong.
"We are neutral on the stock as we expect continued housing
weakness and soft spirits results will be overhangs, but
valuation is undemanding here," Hong wrote in a research note,
adding that commodity cost inflation and debt reduction were
also ongoing challenges.
Fortune Brands warned last month that quarterly earnings
from continuing operations would probably decline at a
steeper-than-expected percentage rate in the high teens to
mid-20s, due in part to an unexpected Australian tax increase
on ready-to-drink spirits products.
Net sales fell 8.6 percent to $2.10 billion as increased
premium spirits shipments in the United States and strong golf
and home products sales in Asia could not fully offset the
impact of the U.S. housing slump and the softening consumer
environment.
Excluding the impact of excise taxes and foreign exchange
rates, net sales fell 10 percent.
Chief Executive Bruce Carbonari said the environment in the
second quarter was tougher than expected.
For the third quarter, the company said earnings, excluding
special items, would be down in the mid-teens to mid-20s
percentages from $1.34 a share a year ago.
For the full year, Fortune still forecast earnings before
items falling at a percentage rate in the high single digits to
the high teens, from $5.06 per share in 2007.
Analysts on average were expecting Fortune to earn $1.17
per share in the third quarter, down 12.7 percent from a year
earlier, and $4.36 per share for the full year, down 13.8
percent from 2007.
Fortune shares were down 7 cents at $58.22 on the New York
Stock Exchange.
(Reporting by Martinne Geller; Editing by Jeffrey Benkoe,
Steve Orlofsky and Lisa Von Ahn)
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