Consumer products company Spectrum Brands Holdings Inc (SPB), Thursday reported a swing to profit in the fourth quarter, led by higher sales and lower interest expense. However, earnings fell short of Wall Street estimates, even as sales beat expectations.
Spectrum has been cutting costs to shore up margins. The company had to grapple with a challenging 2014, marked by volatile global economies, sluggish consumer spending, tighter retailer inventory levels, intense competition and harsh weather.
The company said it hopes to perform well in 2015, but warned of foreign currency headwinds, predominantly the euro, as well as select commodity cost pressures and disruptive pricing behavior by some competitors.
To offset the travails, Spectrum said it is moving to a more efficient global operating structure, combining its pet, home, and garden businesses and its batteries and appliances businesses into the PHG and GBA divisions, as part of a larger realignment effort.
Spectrum, based in Middleton, Wisconsin, posted a quarterly net profit of $48 million or $0.90 per share, compared with a loss of $36.8 million or $0.70 per share last year.
Excluding items, adjusted earnings for the quarter were $0.98 per share, compared with earnings of $0.88 per share a year ago.
On average, eight analysts polled by Thomson Reuters estimated earnings of $1.13 per share for the quarter. Analysts' estimates typically exclude one-time items.
The company's sales for the fourth quarter rose 3.6 percent to $1.18 billion from $1.14 billion in the prior year, topping analysts' estimates of $1.16 billion.
Results were mainly helped by interest expense that decreased to $50.4 million from $184 million last year.
For the fiscal year 2015, Spectrum expects sales growth of low to mid-single digits. Analysts currently project sales growth of 4.1 percent for the year.
Spectrum has been expanding its operations and in September, agreed to buy Procter & Gamble Co's (PG) European pet care business. Financial terms of the deal were not disclosed. Spectrum expects to close the deal early in the first quarter of calendar 2015.
SPB is trading at $89.90, down $1.50 or 1.64%, on a volume of 257k shares on the NYSE.
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