Masco reports 15 pct decline in 3Q profit

Masco reports 15 pct decline in 3rd-quarter profit, raises 2009 outlook as cost cuts continue

• On 5:05 pm EDT, Monday October 26, 2009

TAYLOR, Mich. (AP) -- Masco Corp. said Monday its third-quarter earnings fell 15 percent, partly due to declines in sales of new home construction products and services. But the building-products maker boosted its 2009 profit forecast.

Net income slid to $28 million, or 8 cents per share, for the three months ended Sept. 30. That compares with $33 million, or 9 cents per share, during the same period a year earlier.

Cost cuts related to plant closures, staff cuts and other initiatives led to costs and pretax charges of $21 million, or 4 cents per share after tax, during the quarter. A year earlier, they amounted to $15 million, or 5 cents per share.

Operating income rose to 14 cents per share from 9 cents per share in the same quarter of 2008, when an unusually high tax rate reduced earnings. At a normal tax rate of 36 percent, the year-earlier results would have been 12 cents per share.

Sales dropped nearly 17 percent to $2.09 billion from $2.51 billion in the year-earlier quarter. North American sales declined 17 percent, while international sales sank 13 percent.

Analysts expected a profit of 9 cents per share on revenue of $2.03 billion, according to a survey by Thomson Reuters. Wall Street analysts generally exclude one-time items from their estimates.

Masco said significantly lower sales of new home construction products and services, as well as a decline in consumer spending on home improvement products in both North American and international markets hurt its latest quarterly results.

That was partially offset by higher sales of paints and stains, an improved relationship between selling prices and commodity costs and cost cuts.

Masco, based in Taylor, Mich., said it continues to focus on initiatives such as consolidating its businesses, closing plants and cutting jobs.

Looking ahead, Masco lifted its outlook for the year, saying it now expects operating income of between a loss of 5 cents per share and a profit of 5 cents per share. That's up from a loss of 25 cents to a loss of 5 cents per share. The revised forecast includes charges of about $92 million, or 17 cents per share, related to cost-cutting plans.

It also raised the bottom end of its forecast range for annual expected sales declines, to 18 percent to 20 percent from 18 percent to 22 percent.

But Masco said business conditions remain difficult in its markets, with 2009 housing starts expected to decline 40 percent to about 550,000 units and consumer spending on home improvement products seen continuing at reduced levels in the near-term.

Masco shares gained 7 cents to close at $13.61. After hours, they rose 20 cents to $13.81.

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