H.B. Fuller Profit Down, Outlook Weak; Shares Tank 12%

(RTTNews) - Paint and adhesive maker H.B. Fuller Co. (FUL), Wednesday reported a plunge in profit for the third quarter, hurt largely by lower gross margins and higher operating costs that offset growth in revenues. Both earnings and revenues for the quarter fell short of analysts' expectations.

Shares of H.B. Fuller tanked 12 percent in after-hours trade on the New York Stock Exchange, after it detailed a weak outlook for the fourth quarter.

St. Paul, Minnesota-based HB Fuller's third quarter profit dropped to $4.0 million or $0.08 per share from $28.3 million or $0.55 per share last year.

Excluding one-time items, adjusted earnings declined to $0.42 per share from last year's $0.74 per share. On average, seven analysts polled by Thomson Reuters expected earnings of $0.76 per share for the third quarter. Analysts' estimates typically exclude special items.

H.B. Fuller's revenues for the third quarter grew to $526.8 million from $514.6 million a year ago. Analysts had a consensus revenue estimate of $539.54 million for the third quarter.

Organic revenue grew by 1.3 percent year-over-year.

The company said gross margin for the quarter slipped to 23.8 percent from 28.1 percent last year, due to a variety of factors including excess costs associated with the business integration project in Europe and Project ONE in North America and margin pressure in several operating segments related to raw material cost fluctuations. Selling, general and administrative costs rose to $96.8 million from $90.6 million last year.

Looking forward, the company expects fourth-quarter earnings of $0.60 to $0.70 per share. Analysts currently expect earnings of $0.85 per share for the fourth quarter.

FUL closed Wednesday's trading at $43.98, up $0.16 or 0.37%. The stock, however, plunged $5.37 or 12.21% in the after-hours trade.