Fortune Brands Q2 profit falls 41.4%; lifts dividend - update 1

(RTTNews) - Friday, Fortune Brands Inc. (FO | Quote | Chart | News | PowerRating) posted a 41.4% decline in its second-quarter profit, hurt by one-time items, higher commodities costs and lower revenues. On a continuing operations basis, the company's earnings were down 88.4%. The Deerfield, Illinois-based consumer brands company raised its quarterly dividend and provided adjusted earnings outlook for the third quarter and fiscal 2008.

The company's second-quarter net income was $136.0 million, or $0.88 per share, compared to $232.0 million, or $1.48 per share, in the prior-year quarter.

Income from continuing operations plunged 88.4% to $26.6 million, or $0.17 per share, from $229.5 million, or $1.47 per share, last year.

The company said that reported results reflected the impact of one-time items amounting to a net after-tax charge of $60 million, or $0.37 per share

Excluding one-time items in both the current and prior-year periods, earnings per share from continuing operations declined 17% to $1.25 from $1.51 in the year-ago quarter.

On average, 9 analysts polled by First Call/Thomson Financial expected the company to report earnings of $1.20 per share.

Quarterly net sales declined 8.6% to $2.095 billion from $2.29 billion in the year-earlier quarter. Analysts projected revenues of $2.05 billion for the quarter

According to the company, higher shipments of spirits brands in the U.S. and strong growth in Asian markets for the company's golf and home products brands partly offset the adverse impact of the ongoing weakness in the U.S. housing market, the softening consumer environment in the U.S., higher commodities costs, and the unanticipated Australian excise tax increase on ready-to-drink spirits products.

Sprits sales dropped 1.4% to $607.9 million from $616.6 million a year ago. Home and Hardware sales totaled $1.04 billion, a 13.9% decline from $1.20 billion in the prior-year quarter. Golf sales were $452.4 million, down 4.7% from $474.6 million in the previous year.

Fortune Brands said its board of directors has approved a 5% increase in dividend. The dividend will rise 8 cents per share to an annual rate of $1.76 per share from $1.68 per share. The company's next quarterly dividend is payable on September 2 to shareholders of record at the close of business on August 13.

The company also declared a regular dividend of 66.75 cents per share on the $2.67 Convertible Preferred Stock, payable in cash on September 10 to shareholders of record at the close of business on August 13.

Further, the company said that it has completed the repurchase of the equity minority interest in its Beam Global spirits business previously held by V&S Group. As per the evaluation of an independent evaluator, $455 million plus accrued dividends have been established as the price to repurchase the preferred shares.

Looking ahead, Fortune Brands expects third-quarter earnings before charges or gains to be down at a mid-teens-to-mid-20s percentage rate compared to $1.34 per share in the year-ago quarter.

For the full year, the company continues to expect earnings before charges or gains to be down at a high-single-digit-to-high-teens percentage rate compared to $5.06 per share in 2007.

Wall Street analysts have a consensus earnings estimate of $1.14 per share for the third quarter and $4.32 per share for the full year.

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