Consumer and commercial products company Newell Rubbermaid, Inc. (NWL) Friday reported a decline in the third-quarter profit, amid higher expenses and marginal increase in revenues. Normalized earnings beat analysts' expectations, while revenues came in below view. The firm reaffirmed its outlook for 2014, and 2015.
The company also said it intends to sell its Endicia online postage and Calphalon retail outlet stores and kitchen electrics businesses, to create more focused portfolio, enabling accelerated performance.
For the third quarter, the company's net income declined to $122.3 million or $0.44 per share from $193.3 million or $0.66 per share in the previous year.
Newell Rubbermaid noted that the decline in earnings was mainly due to the absence of a 2013 gain on sale of its Hardware business, negative impact from foreign currency, and a significant increase in Back-to-School advertising and promotion support.
However, this was partially offset by increased sales, gross margin expansion, lower restructuring costs, a lower tax rate, and the positive impact of fewer outstanding shares.
Normalized earnings per share were $0.58, while the firm posted $0.52 per share a year earlier. On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter edged up 1.3 percent to $1.48 billion from $1.47 billion in the preceding year. Wall Street expected revenues of $1.53 billion.
Core sales grew 2.7 percent, excluding 200 basis points of negative foreign currency impacts and 60 basis points from the Ignite acquisition.
According to the company, acquisitions of Ignite Holdings and bubba brands will generate full year 2014 net sales of more than $175 million.
Selling, general & administrative expenses advanced 12 percent to $383.8 million from $342.7 million in the same quarter last year.
Newell announced an expansion of Project Renewal designed to release costs in the areas of procurement, manufacturing and distribution, and through further overhead reduction.
The expansion is expected to generate incremental annualized cost savings of about $200 million when fully implemented by the end of 2017. The company expects to incur costs of around $200 million over the same period.
For full year 2014, the firm still expects Normalized earnings per share to be $1.94 to $2.00, and Core sales growth of 3 to 4 percent. Analysts expect annual earnings of $2.00 per share.
Newell Rubbermaid reiterated its 2015 guidance, and continues to see Normalized earnings per share to be in the range of $2.16 to $2.22, and net sales growth of 3.5 to 4.0 percent. Analysts expect earnings of $2.20 per share for fiscal 2015.
NWL closed Thursday's trading at $34.95.
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