Stanley Black & Decker Inc (SWK) USD2.50
HL comment (26 January 2012)
In a recent announcement, Stanley Black & Decker Inc said that stronger sales, higher prices and a recent acquisition helped boost its fourth-quarter profit by nearly 20%. Financial highlights revealed a fourth-quarter profit of $165.3 million, from $137.8 million in the year earlier quarter. Revenue for the last three months of 2011 rose 17% to $2.79 billion. Both figures surpassed analyst expectations. Operationally, stronger-than-expected margins in the Security and Industrial business offset weaker margins in the Construction & DIY (CDIY) business. Overall, for the full year 2011, Stanley Black & Decker's net profits surged to $674.6 million, from $198.2 million in the prior year. Revenues for the year grew 24% to $10.38 billion.
- Consolidation of acquired companies could result in unexpected integration challenges and costs, which may negatively impact on financial results.
- Raw materials and inflationary issues might impact greater than is currently expected.
- Slower than expected end market growth across the group's different markets, including U.S. residential and Europe could impact on future earnings.
- Management announced a $150 million cost reduction programme to take place in 2012.
- The company, earlier this year reported that it was acquiring Swedish commercial security and monitoring company Niscayah Group AB.
- Having felt the pressures of the recession, the enlarged company has produced a solid level of cost synergies, and has emerged as a more efficient company, with several strong, well-established brands distributed across multiple end markets.
On balance, market consensus indicates a buy.
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