The Wall Street Journal-20080129-Earnings Digest- Toolmakers Warn of Tough Year

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Earnings Digest: Toolmakers Warn of Tough Year

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Toolmakers Stanley Works and Black & Decker Corp. reported higher fourth-quarter profit but sounded a cautious note for 2008 as a slowdown in the U.S. housing market has stifled demand for building equipment.

Black & Decker, which makes DeWalt power tools and Price Pfister faucets, said sales decreased in North America in the latest quarter, reflecting "weak market conditions." The Towson, Md., company said it recognizes that the U.S. economy is slowing and said it doesn't expect a housing recovery this year.

The company expects earnings of $1.10 to $1.20 a share for the first quarter and $5.40 to $5.90 a share for all of 2008. The mean forecasts by analysts surveyed by Thomson Financial were for $1.36 and $6.14, respectively.

In 4 p.m. New York Stock Exchange composite trading, Black & Decker shares slipped 10 cents, or 0.1%, to $69.88, while Stanley Works shares were up $2.33, or 5%, to $48.91.

Stanley Works had tempered investors' expectations for 2008, said analyst Nicholas Heymann of investment firm Sterne, Agee & Leach. Stanley Works, based in New Britain, Conn., backed its 2008 forecast calling for earnings of $4.20 to $4.40 a share and for sales, excluding currency effects, to be flat to 1% higher compared with the previous year.

Chief Executive John Lundgren said 2008 "promises to be an equally, if not more, challenging year from an end-market perspective."

Mr. Heymann said investors were concerned about the home-remodeling outlook. When the economy slows, remodeling picks up as people renovate rather than build new homes, he said. But the credit crunch is making it more difficult for homeowners to get loans.

"Remodeling isn't going to be as helpful during this downturn," he said. "It's basically a bit of a shock."