Newell Rubbermaid Q4 Profit Plunges On Items, Cuts Full Year View

(RTTNews) - Consumer and commercial products company Newell Rubbermaid (NWL) Friday reported a sharp drop in fourth-quarter profit, despite a small rise in sales. However, adjusted earnings improved, along with over 3 percent growth in core sales. Further, the company reduced its full year forecast to accommodate currency impact.

Net income plunged to $52 million from $117.3 million in the prior-year period. Earnings per share were $0.19, compared with the prior year's $0.41.

The decline was attributable to a $65.4 million non-cash pension settlement charge associated with a voluntary offer to certain pension plan participants, a loss on extinguishment of debt, and a significant increase in advertising and promotion support.

These were partially offset by increased core sales, gross margin expansion, lower restructuring costs, contribution from acquisitions and the positive impact of fewer outstanding shares.

Normalized earnings per share were $0.49, while it totaled $0.46 in the prior-year period. On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales in the quarter rose to $1.53 billion from $1.47 billion in the prior year. Wall Street expected revenues of $1.52 billion for the fourth quarter.

Core sales grew 3.3 percent, excluding 320 basis points of negative foreign currency impact and a 400 basis point contribution from acquisitions.

Segment-wise, Writing net sales were flat with last year at $418.2 million, and its core sales increased 5.7 percent driven by higher advertising and promotion support, strong innovation and positive pricing in Latin America.

In Home Solutions, net sales climbed 10.8 percent to $458.6 million, but core sales declined 1.8 percent, as pricing and innovation were more than offset by planned declines on certain lower margin Rubbermaid product lines.

In Tools, revenue grew 3 percent to $227.3 million, and core sales increased 7.5 percent driven by double-digit growth in Latin America related to strong innovation and new distribution and good growth in North America.

In Commercial Products, net sales were $213 million, up 5 percent. Core sales increased 6.7 percent driven by innovation, pricing, and strong volume growth in North America, Brazil, and China.

Going ahead, the firm revised its full-year core sales growth and normalized earnings per share outlook for 2015 to reflect an improved outlook for core sales growth and the negative impact of changes in foreign currency conditions. Normalized earnings per share is expected to be between $2.10 and $2.18 for 2015 and core sales growth is estimated to be 3.5 to 4.5 percent.

The company now expects foreign exchange to have a negative impact of about $0.31 to $0.33 per share on normalized earnings per share in 2015.

In November 2014, the firm expected normalized earnings in the range of $2.16 to $2.22 per share, on projected core sales growth of 4.5 to 4.0 percent.

Michael Polk, President and CEO, said, "While deteriorating foreign exchange rates have caused us to moderate our normalized earnings per share guidance for 2015 to $2.10 to $2.18, at the mid-point of the range our revised outlook represents high single digit earnings growth and strong double-digit growth on a currency neutral basis."

NWL closed up 1.9 percent on Thursday at $37.97.