August 9, 2012 / 10:17 PM / in 6 years

UPDATE 1-Scotts Miracle-Gro 3rd-qtr misses Street estimates

* Second-quarter adj earnings per share $1.60 vs est $1.90

* Second-quarter sales $1.06 bln vs est $1.11 bln

Aug 9 (Reuters) - Lawn and garden products maker Scotts Miracle-Gro Co posted quarterly results that missed analysts’ estimates, hurt by weakness in its soil and fertilizers business and a fall in margins.

The company said consumer engagement began to decline in May and June, and it expected growth to be slow looking ahead to fiscal 2013.

The company had warned in May its full-year earnings may fall short of its previous estimate of $2.65 per share to $2.85 per share as demand for its potting soil and plant seeds failed to take off during the peak gardening season.

Analyst William Chappell of Suntrust Robinson Humphrey said though the company did not update its forecast range for 2012, the starting point for an updated estimate would be around $2.00.

Scotts Miracle-Gro, which sells everything from grass seeds and fertilizers to related tools through retailers, plans to increase prices and cut expenses to improve margins.

Third-quarter adjusted gross margin fell to 34.5 percent from 37.9 percent a year ago, primarily hurt by higher freight and commodity costs.

Net income for the third quarter fell to $93.3 million, or $1.50 per share, from $111.6 million, or $1.69 per share, a year ago.

Revenue was mostly flat at $1.06 billion.

Adjusted net income from continuing operations was $1.60 per share.

Analysts on average expected Scotts to earn $1.90 a share on revenue of $1.11 billion, according to Thomson Reuters I/B/E/S.

Sales at its international business, which contributed about 18 percent to the company’s revenue in 2011, fell 17 percent in the quarter.

Chappell said the decline might be due to poor weather trends and weak economic conditions.

Scotts Miracle-Gro’s international brands include Miracle-Gro, Evergreen, Fertiligene and Celaflor.

Shares of the Marysville, Ohio-based company, which have fallen about 12 percent this year, closed at $41.39 on the New York Stock Exchange on Thursday. They were down 9 percent at $37.50 in after-market trade.

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