Black & Decker's second quarter net earnings were $38.3 million or $0.63 per diluted share, compared to $96.7 million or $1.56 per diluted share in 2Q 2008. Sales were down 27% for the quarter to $1.2 billion, including a negative impact from foreign currency translation. Net cash generation was $234 million for the second quarter and $111 million year-to-date.
"As we expected, demand in our end-markets remained extremely weak in the second quarter," said Black & Decker Corp. Chairman and CEO Nolan D. Archibald. "We continued to actively reduce our cost base, and posted a better operating margin than we had projected. The success of this effort, combined with a favorable insurance settlement, enabled us to report higher EPS than we forecasted. We also reduced inventory 28% year-on-year, driving impressive cash generation and improving our liquidity and balance sheet."
The U.S. Consumer Products Group saw sales increase at a high single-digit rate, Archibald said, in, with strong shipments of lawn and garden products and a new Porter-Cable line outweighing decreases in other categories.
Power Tools and Accessories segment sales decreased 21%, Archibald said.
The U.S. Industrial Products Group had a 30% sales decrease caused by severe declines in residential and non-residential construction.
European sales decreased about 30%, similar to the first-quarter, and Archibald said the company saw a particularly sharp decline in Eastern Europe. Sales declines in other parts of the world reflect the ongoing global economic and construction slowdown.
Hardware and Home Improvement product were down 21% for the quarter.
"Despite lower earnings, our net cash generation of $111 million year-to-date was $46 million better than the same period in 2008," Archibald said. "We reduced inventory $307 million year-on-year, and $183 million since the end of the first quarter. We now expect net cash generation in excess of $200 million for the full year, significantly higher than projected net earnings.
"Looking ahead, we expect a sales decline in the third quarter similar to the first half, as most of our end markets will likely remain weak. We anticipate a narrower sales decline in the fourth quarter, due to some stabilization in the automotive industry and an easier comparison. For the full year, we expect a sales decline of approximately 24%, including 3 points of unfavorable currency."
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