Fortune Brands profit tops Wall St expectations
NEW YORK (Reuters) - Fortune Brands Inc. (FO.N) posted better-than-expected quarterly earnings on Friday as strong demand for its Titleist golf equipment and spirits such as Jim Beam bourbon largely offset the impact of the housing market downturn on home products sales.
The company, whose other brands include Moen faucets, also brought down the top end of its implied full-year earnings forecast. But that did not surprise investors, who bid the shares up slightly after a 4.5 percent sell-off on Thursday.
"The upside surprise and minimal change in full-year guidance stand in contrast to the warnings from other companies with housing exposure and our view that numbers could be lowered," said Goldman Sachs analyst Andrew Sawyer in a research note.
For the full year, Fortune said it expected earnings before special items to be unchanged to down in the mid-single-digit percentage range. It had earlier forecast a range of a mid-single-digit decline to a low-single-digit increase.
Sawyer said the new outlook meant profit of $5.05 to $5.30 per share, compared with the prior range of $5.05 to $5.45.
Earlier this month, housing woes caused earnings warnings from retailers Sears Holdings Corp. (SHLD.O) and Home Depot (HD.N), which sell appliances and other home-related goods.
Deerfield, Illinois-based Fortune reported second-quarter net income of $232 million, or $1.48 per share, down 6 percent from $247.8 million, or $1.63 per share, a year earlier, when a tax-related gain boosted results.
Excluding a restructuring charge, the company earned $1.53 per share, handily beating the analysts' average forecast of $1.44, according to Reuters Estimates.
Fortune said strong results in the spirits and golf businesses helped offset a drop in earnings from home products -- including Simonton windows, Omega cabinets and Moen faucets -- that stemmed from the slow housing market.
But the company said market share gains by Moen, Therma-Tru, Master Lock and its cabinetry brands, as well as its replacement and remodeling business, led the home segment business to outperform the industry.
Net sales rose 4 percent to $2.35 billion. Analysts had expected $2.28 billion.
"We continue to expect that our second-half results will be better than the first half," said Chief Executive Norm Wesley.
The Deerfield, Illinois, company has benefited greatly from the 2005 acquisition of liquor brands such as Courvoisier cognac and Sauza tequila from Allied Domecq, moves that placed it among the world's largest spirits companies.
Many analysts have pegged Fortune as a likely front-running bidder for Vin & Spirit, the Swedish state-owned maker of Absolut vodka, if it comes up for sale, since the company does not already own a leading vodka brand.
Wesley said on a conference call on Friday that he looked forward to bidding for the company and that he was not nervous that turmoil in the debt markets might hurt Fortune's ability to finance the acquisition. Continued...
