Newell Rubbermaid Inc
While Venezuela accounts for only about 1 percent of overall sales, Chief Executive Mark Ketchum said that the country was a lucrative market and disproportionately affected its earnings, and that Newell had no intention of exiting.
We're still making good money there and have good sales, Ketchum told Reuters in an interview. This isn't a surprise.
The consumer products company gave a 2010 outlook below Wall Street's average estimate and said the January 8 devaluation of the Venezuelan bolivar would shave 4 to 5 cents per share from its full-year earnings, excluding one-time items.
The company expects profit to rise in 2010 on continued improvements to its gross margins, forecasting earnings per share of $1.35 to $1.45, up from $1.31 in 2009.
But that view falls below the average Wall Street forecast of $1.47 a share, according to Thomson Reuters I/B/E/S.
The impact of the Venezuelan bolivar devaluation was not in the analysts' consensus view, so excluding the Venezuela issue, Newell's forecast is roughly in line, said Morgan Stanley analyst Dara Mohsenian.
Newell reported earnings of $60.6 million, or 20 cents a share, for the fourth quarter, compared with a year-earlier loss of $256.7 million, or 92 cents a share.
Excluding one time items, the company earned 27 cents a share, in line with the analysts' average forecast.
Net sales fell 2 percent to $1.42 billion, but were above analysts' expectations of $1.41 billion.
Newell shares were down 60 cents, or 4.2 percent at $13.60 in late morning New York Stock Exchange trading.
Other U.S. consumer product companies have also warned that the bolivar's devaluation would strike their bottom lines in 2010.
On Thursday, Procter & Gamble Co
Ketchum said that Newell had won market share in the majority of its businesses despite what he called a challenging year and that he expects sales to pick up more steam in the second half of 2010.
The Atlanta-based company said its gross margin had risen by 7 percentage points to 37 percent, an improvement it attributed in part to its exit from some low-margin product lines such as some plastic chair mats and some plastic storage totes.
Newell has made solid progress in working capital management, cost control, and operating cash flow generation, BMO Capital Markets analyst Connie Maneaty wrote in a note.
The company expects margins to rise by 0.75 to 1.00 percentage point in 2010, while it anticipates core sales, which exclude discontinued lines, to increase at a low single-digit percentage rate.
(Reporting by Phil Wahba; additional reporting by Dhanya Skariachan and Jessica Wohl; Editing by Derek Caney and Lisa Von Ahn)