Masco Corp. announced today that net sales and operating profit for its North American operations were nearly unchanged in the third quarter from the year-earlier period, but strong international business (and a slightly devalued dollar) helped the company return to the black. It also revealed it closed multiple facilities this month, after the third quarter closed, and is looking to divest at least four companies.
The Taylor, Mich.-based company, whose brands include Delta faucets, Behr paints, and Kraftmaid cabinetry, reported its operating profit for North America grew by just $1 million from a year prior to total $80 million in the July-September quarter, while net sales edged down by $4 million to reach $1.524 billion. Meanwhile, a 12% rise in the dollar value of sales outside North America (even though they only grew 4% in local currencies) enabled company-wide sales to rise 3% to $2.006 billion, operating profit to hold steady at $102 million, and net profit attributable to the company to swing to a $36 million profit in this year's third quarter from a $5 million loss a year before. Reductions in both general and income-tax expenses helped generate the swing.
President and CEO Tim Wadhams credited plumbing-related products, gains in the installation segment, and foreign currency exchange factors with helping produce the overall sales growth. On the other hand, the continued downturn in U.S. new-home construction and deferral of big-ticket remodeling work in America hurt business, he added.
"We have continued to take aggressive steps to address these challenging market dynamics and further reduce our cost structure," Wadhams said. " In October, we closed multiple facilities and reduced headcount in those businesses most affected by these economic conditions. In addition, we identified four businesses within the Installation and Other Services segment for divestiture. These businesses were focused on noncore diversified products which include framing, commercial drywall installation, and millwork." Wadhams didn't identify the companies.
Net sales of plumbing products worldwide rose 11.9% to $768 million, but the segment's operating profit declined 6.2% to $91 million. Meanwhile, the Installation and Other Services category posted a 7.9% rise in sales but ended up with an even deeper operating loss, sinking to a $27 million loss from a $22 million loss in 2010's third quarter.
The Cabinets and Related Products segment also reported tepid results, with sales dropping 14% to $307 million, but it was able to reduce its operating loss to $34 million from last year's $61 million shortfall. Sales of decorative artchitectural products declined only 1.7% to $455 million, though its operating profit shrank 15.4% to $88 million. And the Other Special Products segment inched up in both sales (by $2 million to hit $161 million) and operating profit (by $1 million to total $12 million).
Masco didn't provide regional breakdowns for any of its segment reports.
Wadhams said the company continues to believe U.S. housing starts for 2011 will be at 2010's level. "Longer-term, however, we are confident about the fundamentals for the new home construction and home improvement markets and we are optimistic about the future," he said. "We continue to focus on the things we can control, including managing our cost structure and business portfolio, and launching exciting new programs in paint, plumbing, cabinets and builder hardware. In addition, we are funding global initiatives in our paint and plumbing businesses."