Fortune Brands Inc, maker of a range of products including Moen faucets and MasterBrand cabinets, posted higher-than-expected quarterly profit Friday on cost cuts, but lowered its full-year earnings outlook because of the weak economy.
Shares still rose, as a positive report from a realtor trade group heartened investors, who have forced Fortune shares down 51 percent this year due to its exposure to the anemic housing market.
Sales of previously owned U.S. homes rose at the largest rate since July 2003 and the inventory of unsold homes fell, the National Association of Realtors said on Friday.
"Housing has been a big problem (for Fortune) for a year and a half or two, but I think it's starting to bounce along the bottom in terms of comparisons," said Barrington Asset Management analyst Alex Paris.
But Fortune, which also sells Jim Beam bourbon and Titleist golf equipment, said U.S. consumers were being cautious about spending on housing remodeling projects. It also cited weak demand for golf equipment in the United States and Europe.
"Given that the current economic environment has become more challenging and uncertain than anyone had anticipated, we are approaching our earnings targets with caution," said Chief Executive Bruce Carbonari.
Third-quarter net income jumped nearly 61 percent to $335.9 million, or $2.21 per share, from $208.9 million, or $1.33 per share, a year earlier. The results included one-time gains stemming from the end of Fortune's joint venture with Absolut vodka owner V&S Group.
Excluding special items, earnings were $1.11 per share, topping analysts' average forecast of $1.08, according to Reuters Estimates.
Net sales fell 10 percent to $1.92 billion, hurt by the weak U.S. housing market. Excluding excise taxes and foreign exchange rates, sales fell 12 percent.
Sales fell 19.5 percent in Fortune's home and hardware business, its largest by sales but not profit. The company said consumers were taking "a very cautious approach" to big-ticket discretionary purchases, such as home remodeling.
Fortune's spirits business, which now accounts for nearly 60 percent of total profit, posted a 4 percent sales increase. The unit benefited as its pricing increased and higher-priced items made up a bigger percentage of sales.
The golf business' sales fell 3.4 percent as double-digit gains in some Asian markets failed to offset weak demand in the United States and Europe.
For the fourth quarter, Fortune is targeting earnings per share, excluding items, to be down at a low-30s to high-40s percentage rate.
For the full year, the company expects a profit drop in the high-teens to mid-20s. Its prior forecast called for a decline at a high single-digit to high-teen rate.
Fortune shares were up 99 cents, or 2.8 percent, at $35.84 on the New York Stock Exchange in afternoon dealings.
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