UPDATE 2-Stanley B&D cuts forecast, government cuts add to uncertainty
* Cuts full-year adj earnings/shr forecast to $4.90-$5.00 from $5.40-$5.65
* Security business margin falls to 12.2 pct from 16 pct
* Shares fall as much as 15 pct (Adds analyst comment, detail on European business, updates shares)
By Siddharth Cavale
Oct 16 (Reuters) - Power tool maker Stanley Black & Decker Inc slashed its 2013 profit forecast, blaming weakness in its European security business and the U.S. government's shutdown and spending cuts, sending its shares down as much as 15 percent.
Stanley Black & Decker reported a better-than-expected quarterly profit but investors were spooked by the soft outlook, which the company attributed mainly to weakness in Europe.
Organic sales in the European security business, which sells automatic doors and commercial locks, fell 4 percent in the third quarter ended Sept. 28.
But the company also warned of more weakness in its U.S. businesses, in part due to government cutbacks.
"We really believe the U.S. government sequestration and shutdown have had a modest impact in the third quarter on us and will have a slightly more significant impact on us in the fourth quarter," Chief Financial Officer Donald Allan said on a conference call with analysts on Wednesday.
However, CLSA analyst Jeremie Capron downplayed the impact of the shutdown and budget cuts.
"It is really about the European security business," he said. "The issues with the government introduce more uncertainty and reduce their forecasting ability."
Only about 3 percent of the company's total revenue comes directly from the government, he said.
Stanley Black & Decker reduced its full-year adjusted earnings forecast to $4.90-$5.00 per share from $5.40-$5.65. Analysts on average were expecting earnings of $5.44 per share, according to Thomson Reuters I/B/E/S.
The operating margin in the security business fell to 12.2 percent from 16 percent a year earlier.
Stanley Black & Decker bought Swedish security systems maker Niscayah in 2011 and the business now forms the largest part of its security business in Europe.
Management changes and integration issues contributed to the decline in sales in the business, Capron said.
The security business, which accounted for 21 percent of third-quarter sales, grew 4 percent organically in North America and emerging markets.
Overall net income rose 44 percent to $166 million, or $1.07 per share, from $115.2 million, or 54 cents per share, a year earlier.
On an adjusted basis, the company earned $1.39 per share, beating the average analyst estimate by a cent.
Total sales rose 10 percent to $2.76 billion, missing the average forecast of $2.82 billion.
Stanley Black & Decker shares were down 14 percent at $76.91 on the New York Stock Exchange at midday. They had risen 24 percent in the year up to Tuesday's close. (Reporting by Siddharth Cavale and Sagarika Jaisinghani in Bangalore; Editing by Sriraj Kalluvila and Ted Kerr)
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