Newell to sell some units to focus on emerging markets
NEW YORK (Reuters) - Newell Rubbermaid Inc (NWL.N) announced plans to sell its hardware and teaching aids units so it could focus more on products for contractors and on emerging markets.
Friday's news coincided with a better-than-expected quarterly profit from the consumer products maker as its efforts to boost productivity offset lackluster sales.
Net income fell to $54.2 million, or 19 cents a share, in the first quarter from $79.3 million, or 27 cents a share, a year earlier.
The maker of Sharpie pens and Rubbermaid storage containers has been banking on fast-growing Latin America to offset challenges in crisis-ridden Europe and a slowdown in Asia.
The businesses that Newell plans to sell include the Bulldog, Shurline, Ashland, Amerock and Mimio brands as well as its drapery hardware unit. Together, they had sales of slightly more than $300 million last year.
"They do not fit with our strategy," Newell Chief Executive Officer Mike Polk said, adding the company planned to focus on its commercial products, tools and writing businesses instead.
He said the company wants to focus on worldwide infrastructure construction.
For example, the Shurline brand that Newell is planning to sell focuses on do-it-yourself customers and not on contractors, while the windows hardware unit it is selling is highly U.S-centric, Polk said.
Since he took the helm in July 2011, the company has cut jobs, consolidated manufacturing and distribution facilities and reduced the number of business units to trim costs.
Excluding restructuring costs, charges for discontinued operations and Venezuela's currency devaluation, and a tax benefit, Newell earned 35 cents a share. Analysts on average expected 32 cents, according to Thomson Reuters I/B/E/S.
Net sales fell 0.8 percent to $1.24 billion, missing the analysts' forecast of $1.32 billion. While sales fell in its writing products and tools businesses, those at its home and commercial products segments rose.
Sales excluding currency fluctuations, or core sales, rose 0.2 percent.
Other companies that exceeded analysts' profit forecasts despite weaker-than-anticipated sales in the latest quarter include Procter & Gamble Co (PG.N) and Clorox Co (CLX.N).
OFFICE SUPPLY INDUSTRY WOES HURT
Newell, which counts Office Depot Inc ODP.N and OfficeMax Inc OMX.N as its customers, said net sales fell 9.3 percent in its writing products business, in part because of weakness in U.S. office superstores.
Same-store sales have declined for six consecutive years in the office supply industry. Earlier this week, Office Depot Inc ODP.N posted a lower-than-expected quarterly profit, while in March, market leader Staples Inc (SPLS.O) forecast weak earnings for the year.
Polk said he expected the pending merger of Office Depot and OfficeMax to affect Newell, with "a pretty significant liquidation" of retailer inventory occurring shortly after the deal closes.
"I think it's going to be a tough year for the U.S. superstore channel," Polk said on a call with investors. "With respect to what happens post the closure of the deal, we can only speculate, obviously."
Newell, which began raising prices of some goods late in the first quarter, stood by its full-year profit outlook of $1.78 to $1.84 a share, before items. The analysts' forecast is $1.82.
(Reporting by Dhanya Skariachan in New York; Additional reporting by Jessica Wohl in Chicago; Editing by Stephen Coates, Lisa Von Ahn and Nick Zieminski)
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