(Recasts; adds dateline, analyst’s comments, background, share movement)
By Dhanya Skariachan
BANGALORE, April 14 (Reuters) - Scotts Miracle-Gro Co (SMG.N), a supplier of lawn and garden products, forecast a second-quarter profit below market estimates as an unusually cold March kept gardeners indoors, sending its shares down as much as 8 percent.
The world’s largest maker and marketer of horticultural and turf products, which will also take a charge related to its recall of wild bird food during the quarter, maintained its outlook for the full year.
The slow start to the season and the birdseed recall has taken away much of the cushion that was in Scotts Miracle-Gro’s numbers, SunTrust Robinson Humphrey analyst William Chappell said in a research note to clients.
“This is an opportunity for competitors to grab further market share and could put increased pressure on its (Scotts) margins as replacement product will be manufactured with higher input costs,” Chappell said.
Scotts Miracle-Gro competes with Bayer CropScience AG, a unit of German chemicals and drugs giant Bayer BAYG.DE, and Dow AgroSciences, a unit of Dow Chemical Co DOW.N.
The company, whose brands include Ortho, Miracle-Gro, Hyponex and Turf Builder, said it expected a second-quarter profit of about $1.14 to $1.18 a share.
Analysts on average had expected the company, based in Marysville, Ohio, to earn $1.42 a share, before items, according to Reuters Estimates.
For fiscal 2008, Scotts Miracle-Gro expects earnings to be flat at $2.37 a share, before charges, while Wall Street analysts expect a profit of $2.42 a share.
Although Chappell thinks the company could meet its 2008 outlook, he added there is now increased pressure to have good weather and strong sell-through in April and May.
He has a “neutral” rating on the stock.
The company, whose products include grass seeds, fertilizers, herbicides, potting soils and related tools, expects fiscal-2008 results to include $15 million to $20 million in costs related to its recall of wild bird food.
A significant portion of these costs will be included in the second-quarter results, the company said.
The company’s shares, which touched a low of $31.65 earlier, pared some losses to trade down about 3 percent at $33.44 in morning trade on the New York Stock Exchange. (Additional reporting by Shivani Singh; Editing by Pratish Narayanan, Himani Sarkar)