Black & Decker profit falls on merger costs

Posted: 6:31 pm Wed, February 3, 2010
By Associated Press

Black & Decker Corp. said Wednesday its fourth-quarter profit fell on expenses related to its $4.5 billion acquisition by Stanley Works.

The Towson-based power tool company has been hit by the recession and housing crisis, but said it expects a “modest improvement” in many of its markets this year as the economy recovers.

Black & Decker’s earnings slipped 22 percent to $33.9 million, or 55 cents per share, compared with $43.7 million, or 72 cents per share, a year earlier.

Taking out expenses related to its acquisition by Stanley Works, profit was $1.24 per share.

Analysts polled by Thomson Reuters, whose estimates normally remove one-time items, expected a much smaller profit of 76 cents per share.

The results were also well above Black & Decker’s prediction for earnings between 68 cents and 78 cents per share.

When the new company emerges as Stanley Black & Decker in the first half of this year, it will be the nation’s largest tool company. Both companies will hold special shareholders meetings on March 12 to vote on the transaction.

Executives say the all-stock deal will cut costs by $350 million within three years, likely in part through an unspecified number of job cuts, and increase earnings per share by $1 within three years.

Still, as Black & Decker muscles through the recession, it saw its sales for the period ended Dec. 31 fall 6 percent to $1.3 billion from $1.38 billion. That still edged out Wall Street expectations by a hair.

Black & Decker, whose brands include DeWalt, Porter-Cable and its namesake, said its full-year profit declined 55 percent to $132.5 million, or $2.17 per share, from $293.6 million, or $4.77 per share, in the prior year.

Adjusted earnings were $3.01 per share.

Annual sales dropped 22 percent to $4.78 billion from $6.09 billion.

The company anticipates a mid-single-digit increase in sales during the first quarter, with full-year sales up by low single-digits. It did not provide any earnings forecasts.

Black & Decker’s shares gained $2.54, or nearly 3.7 percent, to close at $71.29 Wednesday. The stock has traded in a 52-week range of $20.10 to $72.82.