Illinois Tool profit tops estimates on lower costs

Illinois Tool Works Inc., the maker of Hobart food mixers and Duo-Fast nail guns, reported third- quarter earnings that topped analysts' estimates as cost reductions boosted profitability.

Net income declined to $302.4 million, or 60 cents a share, from $453.5 million, or 87 cents, a year earlier, the Glenview-based company said today in a statement. Profit excluding restructuring and impairment charges was 67 cents a share. The average estimate of 18 analysts surveyed by Bloomberg was for 53 cents.

Cost reductions helped operating margins widen to 13.5 percent from 9.9 percent a year earlier, Illinois Tool said. Acquisitions added 3.6 percent to revenue, which declined 20 percent to $3.58 billion as the recession reduces demand for construction, automotive and other industrial goods.

"ITW should, on the whole, benefit from a revival in economic activity," Timothy Thein, an analyst for Citigroup Global Markets Inc. in New York, said in a Sept. 15 report. "We remain concerned about the company's longer-term growth profile, which has historically been highly dependent on acquisitions to expand revenues."

Illinois Tool forecast fourth-quarter earnings per share of 54 cents to 66 cents. The average estimate of 18 analysts was for profit of 56 cents, excluding certain items.

Illinois Tool rose 68 cents, or 1.5 percent, to $46.90 at 8:23 a.m. in trading before the opening of the New York Stock Exchange. The shares gained 32 percent this year through yesterday.