Fortune's profit slips on slow home sales
Fortune Brands Inc., the holding company for Jim Beam bourbon and Moen faucets, said fourth-quarter profit fell as the worst housing slump in 26 years stemmed demand for home-improvement products.
Earnings in the first quarter also may decline, Deerfield-based Fortune said Friday in a statement. Fourth-quarter net income dropped 22 percent to $201.5 million, or $1.28 a share.
Sales rose less than 1 percent to $2.22 billion from $2.2 billion, beating the average analyst estimate of $2.19 billion. Revenue at Fortune's home and hardware unit, its largest, is falling because declines in home sales curbed consumer demand for remodeling projects. The company expanded its liquor unit to lessen dependence on the U.S. housing market.
"Fortune is delivering more or less as expected given the tough macro environment," Bryan Spillane, an analyst with Bank of America Equity Research, wrote in a research note Friday.
Excluding costs to close three factories in Fortune's home and hardware unit, profit met the $1.43 a share estimated by 10 analysts in a Bloomberg survey.
Fortune said earnings per share this quarter may decrease in the high single-digits on a percentage basis from 81 cents a year earlier. Analysts estimated 85 cents.
With its Moen faucets and Therma-Tru doors, Fortune is withstanding the real-estate slump better than others by selling products used more to remodel rather than build homes.
Sales in the liquor unit rose 10 percent to $858.8 million and accounted for $290.1 million of the company's $336 million in operating income.
Home and hardware sales dropped 7.6 percent to $1.11 billion. Revenue in Fortune's golf unit, which includes the Titleist and FootJoy brands, increased 13 percent to $245.1 million.
Sales of previously owned homes fell 2.2 percent in December to an annual rate of 4.89 million, the National Association of Realtors said Thursday. For all of last year, sales of single-family homes declined 13 percent, the most since 1982. The sale of existing homes triggers home-improvement spending, as consumers buy paint and faucets and flooring to upgrade or refurbish property.
The company sold its wine unit to Constellation Brands Inc. in December for $885 million. Fortune may bid in a possible sale of Sweden's Vin & Sprit AB, maker of Absolut vodka.