Fortune Brands balances slowing of housing unit

NEW YORK -- A single malt scotch may have little to do with the housing market, but Fortune Brands Inc.'s kismet is closely tied to both.

The Deerfield-based company is arguably best known as a seller of alcohol. But its portfolio also includes a hardware and building-material business that accounts for roughly 54 percent of its total revenue and has left it exposed to the downturn in the U.S. housing market.

That leaves Fortune Brands more dependent on profits from sales of products like Jim Beam bourbon, Courvoisier cognac and Dalmore single malt scotch.

The wine and spirits business, along with a much smaller unit that sells golfing products, has helped offset at least some of the pressure from housing. But it "didn't offset it all, so their earnings are down for the year," said Alexander Paris, president of Barrington Research.

Still, investors haven't been as harsh on Fortune Brands' stock as they have with other companies exposed to the housing market. Fortune's share price is down about 4 percent for the year, a much milder decline than the roughly 20 percent drop incurred by faucet and cabinet maker Masco Corp.

Fortune's home and hardware business sells Moen faucets, KitchenCraft cabinetry and Master Lock padlocks. A large part of Fortune's housing-products division is targeted at the "replace and remodel" segment, which has helped limit declines as consumers continue to remodel existing homes.

"Although Fortune is subject to the housing industry and all its problems, it is well-diversified," said Paul Koscik, an analyst and portfolio manager at Huntington Funds who tracks Fortune Brands' stock.

Fortune's alcohol business offers a steady source of profits and is expected to do well even if economic conditions turn tougher. "Recession or boom, people still drink," said Paris, who owns Fortune shares.