July 22, 2009 / 11:56 AM / 9 years ago

UPDATE 2-Stanley Works posts lower quarterly profit

* Q2 EPS $0.87 vs year-ago $0.98

* Adj EPS of $0.63 beats Street view of $0.55

* Taking actions to save another $50 mln

* Keeps FY ex-items shr view of $2.00-$2.50

(Adds details from presentation slides)

July 22 (Reuters) - Tool maker Stanley Works (SWK.N) posted a 11 percent drop in second-quarter profit and said it would cut more costs, citing steeper-than-expected volume declines during the quarter.

The supplier of tools, hardware and security systems expects to save about $50 million annually from the new cost-cutting actions in July — 35 percent of which is headcount-related.

Stanley Works cut 2000 jobs, closed three plants and suspended certain employee benefits temporarily in 2008. In the first quarter of 2009, it cut an additional 550 jobs.

It expects to save about $265 million in 2009 through actions taken since last year.

The company said volumes declined 24 percent during the quarter and expects full-year unit volumes to decline 18 to 20 percent.

It expects 2009 earnings of $2.34 to $2.84 a share, including a gain on debt extinguishment.

Excluding gains, it continues to forecast $2.00 to $2.50 a share. Analysts were looking for $2.39 a share.

Free cash flow for 2009 is expected to be about $300 million.

The company also said margins reported in the first half of the year are “largely maintainable” for the full year. Second-quarter gross margin was 39.9 percent.

For the second quarter, net income was $69.5 million, or 87 cents a share, down from $78.1 million, or 98 cents a share, a year ago.

According to Reuters Estimates, Stanley Works’ adjusted earnings of 63 cents a share beat analysts’ expectations of 55 cents.

Revenue fell 20 percent to $919.2 million, below analysts’ view of $979.2 million.

Sales at the company’s security segment were up 8 percent to $391 million, while sales at industrial and construction/do-it-yourself segments fell 40 percent and 28 percent, respectively.

Shares of the company were down 82 cents at $37.21 in early trade on the New York Stock Exchange. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Aradhana Aravindan)

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