Masco Corp., the manufacturer of brand names such as Behr paints, Delta faucets, and KraftMaid cabinets, reported operating profits fell 73%, to $21 million, during the first quarter compared to the same period a year ago, the company announced Monday. The slip in operating profit comes along with drops in net sales and gross profit.
Net sales for the quarter dropped 4.3% to $1.77 billion, compared to first quarter 2010. Gross profit at the Taylor, Mich.-based company fell 13.6% to $425 million for the quarter.
Masco CEO Tim Wadhams cited the poor conditions in the new home construction market as well as homeowner's refusal to make major home improvements as the causes for the poor performance.
"As anticipated, the trends impacting our business, including depressed new home construction, the deferral of 'big ticket' repair and remodel activity and commodity cost pressures have continued into 2011," said Wadhams.
The company's cabinet division took the biggest hit of all the divisions with net sales slipping 24% between first quarter 2010 and first quarter 2011. The segment finished at $307 million in net sales for the quarter. The segment also saw operating losses deepen to $50 million for the quarter, a vast fall from the $15 million operating loss the segment suffered during the same period a year ago. The operating loss accounted for 16.3% of net sales.
Masco's installation services also suffered with a 7% fall in net sales to $254 million for the quarter. The segment did improve its operating loss however, to $40 million, up from the $42 million operating loss reported during 2010's first quarter.
Net sales in the decorative architectural products segment dropped 4% to $375 million and operating profit fell 20.7% to finish the quarter at $69 million. The operating profit accounted for 18.4% of sales during the quarter.
The only two segments to see improvements in sales were the plumbing products segment and the other specialty products segments. The plumbing products segment reported net sales growth of 7% to $710 million and saw operating profit remain steady at $84 million, the same amount reported a year ago. The other specialty products segment increase net sales by 2% to $126 million, but saw operating profit fall 50.9% to $53 million for the quarter compared to the same period last year.
The company is taking a somewhat cautiously optimistic approach to the rest of the year.
"While we still believe that the second half of 2011 will be stronger than the first half, our enthusiasm has been tempered somewhat. Job growth has been modest at best, energy costs have increased, reflecting the turmoil in the Middle East and most economists have reduced their forecasts for 2011, including for housing starts," Wadhams said. "Given the uncertainty of the timing and strength of the recovery in our markets, we will continue to focus on the things we can control to improve our execution and strengthen our brands."