Masco posted a fourth-quarter net income loss of $508 million, compared to a loss of $151 million in the fourth quarter last year. Sales for the period, which ended Dec. 31, declined 25 percent to $2.0 billion.
The company said the results were
hurt by depressed home construction markets, as well as a continued decline in
consumer spending for home improvement products. Masco's many home channel
brands include Delta Faucet, Behr, Arrow Fastener, Milgard Windows & Doors
and KraftMaid Cabinetry.
“Things really, really fell off
late in the year,” saidTimothy Wadhams, president and CEO,
who called the fourth quarter “a continuation of what has been a very difficult
The company does not expect any
quick turnaround in 2009. As chief operating officerDonald Demarieput it, “Our view of ‘09 over the last 90 days has gotten progressively worse.”
To cope with the downturn, Masco
since 2006 has cut about 40 percent of its North American workforce and closed
17 manufacturing plants. In 2008, it cut more than 13,000 jobs.
Nishu Sood, a
Deutsche Bank-North America analyst who covers Masco, said the results of the
last quarter were “a disappointment even against low expectations.” The company
said it could achieve breakeven profit or a loss for 2009 as home building
declines and consumers spend less on home improvement. Masco projects its
2009 free cash flow will be about $300 million.
Masco said that sales to “key
retailer customers,” which includes Home Depot and Lowe’s, fell 14 percent in
the fourth quarter. Wadhams said he expects sales in the U.S. will be down “low
double digits” in ’09, and “mid-teens” down in Europe. Masco said quarterly sales
fell 27 percent for cabinets, 22 percent for plumbing products, and 36 percent
for installation and other services.
“We’ve seen a big decline on the
consumer side of the business,” said Wadhams, noting that the company will look
to preserve liquidity in ‘09 to fund its business operations “and position
ourselves for potential growth opportunities.”
In the meantime, the company will
continue to look at business consolidations, plant closures, headcount
reductions, system implementations and other initiatives. For 2009, the company
cut its quarterly dividend to 30 cents a year from 94 cents a year, citing the
“extremely challenging” market for the next several quarters. It is the first
time in Masco’s 50-year history that it has cut its dividend.
For the full year, Masco posted a
loss of $391 million, compared to net income of $386 million in 2007. Sales for
the year declined 17 percent to $9.6 billion.
Looking ahead, the company's outlook called for
full-year 2009 sales to decline mid-to-high teens percent compared to the
full-year 2008. While the next several quarters will be "extremely
difficult," the company said it was confident that the long-term
fundamentals for the new home construction and home improvement markets are
Masco Net Sales Decline Further In Q4
February 16, 2009