3rd quarter B&D; profit $18 million


Black & Decker Corp., which has been trying to convince investors that its takeover of the Emhart Corp. would cause only temporary financial pain, reported yesterday that the squeeze on its profits is easing.

The Towson-based hardware conglomerate said it earned $18 million in the third quarter, which ended Sept. 30, compared with last year's third-quarter loss of $29 million and this year's second-quarter profit of $16 million.

After the announcement, Black & Decker's stock, which had traded as low as $8.50 in recent weeks, rose 50 cents to close at $9.875 a share.

Black & Decker's stock was trading at about $22 in the weeks before the April 1989 takeover of Emhart, which has divisions that make and sell Price Pfister plumbing goods, Kwikset locks and glass-making machinery.

Stock analysts who follow the hardware industry hailed yesterday's earnings report as a step in the right direction but said that investors will continue to worry until Black & Decker pays off most of the approximately $3 billion it still owes.

"They are making some headway," said Cornelius Sewell, who watches the company for investor clients of Argus Research Inc. in New York. "But I am uncomfortable with that kind of debt in a weak economy."

Franklin Morton, an industry analyst with Alex. Brown & Sons in Baltimore, called the report "darn good" but said he believes that Black & Decker's claim that it would be back to normal in 18 months was overoptimistic.

Sales of Black & Decker's power tools and housewares didn't keep pace with inflation in the quarter, and a slowdown in sales will make it more difficult for the company to improve its profits, he said.

"The recovery is going to take at least another year," Mr. Morton said.

Another important reason for the slow digestion of Emhart, he said, is a sudden drop in sales of businesses.

Black & Decker had planned to sell off $1 billion worth of Emhart's divisions by now to raise cash to reduce its debt. But Black & Decker has been able to raise only $700 million from sales of those divisions and has divisions that some industry experts thought it ought to keep.

And Black & Decker has been unable to find buyers for the non-hardware divisions it wanted to sell.

For example, Nolan Archibald, the company's president, recently told stock analysts that he would be willing "to take a haircut" to unload McLean, Va.-based Planning Research Corp., a profitable consulting operation with revenues of about $700 million.

Black & Decker spokeswoman Barbara Lucas said the profit for the summer quarter is "evidence that Emhart is working," but she conceded that the recovery is taking longer than expected.

She said the company has "had a higher interest-expense burden longer than we expected to" but that it hopes to sell more divisions for cash in coming months.

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