Sales fell slightly at Black & Decker Corp., but the world's largest power tool maker posted a 15 percent increase in second-quarter profit yesterday after it continued to lower costs.
The Towson-based company's total sales fell to $1.12 billion in the quarter that ended June 29, excluding foreign currency translation, compared with $1.13 billion in the corresponding quarter last year.
Higher gross margins, lower interest expense and favorable exchange rates helped Black & Decker's net income rise to $75.7 million, or 97 cents per diluted share, compared with $66.1 million, or 81 cents per diluted share, in last year's second quarter.
Analysts expected the company to earn 93 cents per diluted share, according to a survey of 12 analysts by Thomson First Call.
"Our focus on operational improvement and cash flow, together with favorable currency, enabled us to grow earnings per share significantly for the fifth straight quarter," Chief Financial Officer Michael D. Mangan told analysts in a conference call yesterday.
Shares of Black & Decker fell $2.12, or 5 percent, to close at $41.60 on the New York Stock Exchange yesterday.
Sales in Black & Decker's largest division - power tools and accessories - were down 6 percent in the quarter to $765.6 million, with decreases in North America and Europe, but increases in the rest of the world.
Sales in the hardware and home improvement segment fell 2 percent to $192.1 million. The company saw gains in its Kwikset lock business, but those were offset by lower sales of Price Pfister plumbing products because of previously announced shelf space losses at Home Depot Inc.
The company's fastening and assembly systems division, which makes products for the automotive and industrial markets, declined 4 percent to $128 million.
Black & Decker lowered costs by $12 million in the quarter compared with last year's second quarter as part of a restructuring program that is expected to save the company $35 million this year and $40 million next year. The company saved $25 million last year as part of the program.
The company said yesterday that it has ceased production at its Easton power tools plant, which has cost the Eastern Shore 1,300 jobs, and a Kwikset lock plant in Georgia.
Black & Decker also plans to close the former Emglow compressor plant in Johnstown, Pa., and lay off 100 workers by year's end, a spokeswoman.
For the year, the company expects a "low single-digit decline in sales" and diluted earnings per share in the range of $3.65 to $3.75. Last year, Black & Decker reported diluted earnings per share of $3.23.