Manufacturer results point to better home market
NEW YORK (Reuters) - Quarterly results for Whirlpool Corp (WHR.N), Fortune Brands Inc (FO.N) and several other manufacturers pointed to slight improvement in the U.S. housing market, sending the companies' shares higher.
The news came as the National Association of Realtors reported sales of previously owned U.S. homes surged to a two-year high in September.
Whirlpool posted much-higher-than-expected third-quarter earnings on Friday and boosted its full-year profit forecast, helped by aggressive cost-cutting to counter tepid demand for its appliances.
The world's largest appliance maker, whose brands include Maytag and KitchenAid, also brightened its industry shipment outlook for the United States. It said it expects a decline of about 10 percent in 2009, after previously forecasting a drop of 10 percent to 12 percent.
"Down 10 percent might be a little bit ambitious ... they must be expecting an awfully good November and December," said David MacGregor, an analyst with Longbow Research. He said promotional sales at retailers like Sears Holdings Corp (SHLD.O) and Lowe's Cos Inc (LOW.N) were helping in "moving a lot of volumes."
On a conference call, Whirlpool said it was seeing demand in the United States stabilizing, albeit at lower levels.
Standard & Poor's Equity Research analyst Ken Leon upgraded Whirlpool to "hold" from "sell" and said he sees the company's sales rising 4.5 percent in 2010 following an estimated 11 percent decline in 2009.
Shares of Whirlpool were up 5.7 percent to $77.76 in afternoon trade on the New York Stock Exchange after touching a 52-week high of $79.29 earlier in the session.
SIGNS OF STABILIZATION
Whirlpool's slightly upbeat comments were echoed by Fortune Brands, which makes Moen faucets as well as Jim Beam bourbon. Fortune raised the low end of its full-year profit forecast, partly because of signs of stabilization in the U.S. new-home construction market.
"We're seeing slightly better new home construction activity, particularly for entry-level homes," Fortune CFO Craig Omtvedt said on a conference call. "It may very well be that this is a pull-forward in demand in advance of the expiration of the first-time home buyer tax credit."
Honeywell Inc (HON.N) Chief Financial Officer Dave Anderson noted "positive point-of-sale trends" at major retailers for his company's thermostats and other consumer products. The diversified U.S. manufacturer reported a better-than-expected third-quarter profit.
Ingersoll-Rand Plc (IR.N), a maker of heating and cooling systems for homes, businesses and transport, said the U.S. housing market and replacement spending remain weak but are falling at a slower rate. The company, which also makes security products like Shlage locks, posted better-than-expected quarterly earnings on Friday.
Ingersoll's biggest segment, which provides air conditioning systems and services, said commercial revenue fell 16 percent, while sales to residential customers were down much less, at 6 percent.
Fortune Brands shares rose 0.7 percent and Ingersoll gained 1.4 percent. Honeywell was off 0.5 percent. Continued...
