Black & Decker Corp. said yesterday that it would consolidate manufacturing plants and reduce personnel this year as the housing slump continues to take its toll on sales, which the company expects will decline this year.
The cutbacks at the Towson power tools and home improvement company were announced as Black & Decker released its fourth-quarter and full-year earnings, which continued to suffer from the economic slow- down.
Black & Decker Chairman and Chief Executive Officer Nolan D. Archibald told a conference call with analysts that declining sales would force the company to shift some manufacturing work to lower-cost sites but he declined to identify specific areas.
In the United States, the company has manufacturing plants in Decatur, Ark.; Shelbyville, Ky.; Jackson, Tenn.; and Tampa, Fla.
The restructuring would also affect nonmanufacturing jobs in the power tools segment and could include some in Maryland, spokesman Roger A. Young said after the call with analysts. The company employs about 25,000 worldwide.
Excluding a tax settlement and other one-time charges, Black & Decker saw its profit decline for 2007 and for the three months that ended Dec. 31.
The company reported quarterly profit of $67.4 million or $1.06 per share compared with profit of $95.7 million or $1.38 per diluted share for the fourth quarter of 2006. Sales for the quarter rose 3 percent to nearly $1.7 billion in part because of favorable foreign exchange rates.
For the full year, Black & Decker posted net income of $398.1 million or $6.03 per diluted share compared with $486.1 million or $6.55 per diluted share for 2006. Those earnings excluded the one-time gains and charges. Sales rose 2 percent to $6.6 billion.
When factoring in one-time charges and a favorable $153.4 million tax settlement, the company outpaced its earnings fourth quarter and for the previous year. With those gains, profit for the quarter was $187.4 million and $518.1 million for the year.
During the conference call with analysts yesterday, Archibald blamed the housing slump and a steady rise in the price of raw materials for eating into sales and profits.
The Commerce Department reported yesterday that sales of new homes fell 26.4 percent in 2007, making it the worst sales year on record. About 20 percent of Black & Decker's sales are tied to home construction. And fewer people are renovating existing homes, which further reduces demand for Black & Decker's power tools and Kwikset locks.
A recall of certain DeWalt XRP cordless power drills during the last quarter affected sales.
Archibald said manufacturing operations for the segments most vulnerable to economic conditions - power tools and accessories and hardware and home improvement - would see some consolidation.
Last year, the company dismissed the head of manufacturing for its power tools segment as well as 70 salaried employees. In 2006, Black & Decker closed a manufacturing plant in Fayetteville, N.C., which employed 675, and eliminated 160 jobs in Jackson, Tenn.
For 2008, the company expects earnings in the range of $5.40 and $5.90 per share, with first- quarter profit at $1.10 to $1.20 per share.
In a research note issued yesterday, analyst Sam Darkatsh of Raymond James & Associates Inc. called the fourth quarter "sloppy."
"We are concerned about the fact that Black & Decker had a terrible quarter versus a very easy comparison of a year ago, when retailers slashed inventories," he wrote.
Black & Decker stock closed down 10 cents yesterday at $69.89.