- Cabinetry giant Masco Corp. (NYSE: MAS) reported a 4 percent first quarter sales decline to $1.772 billion, and a net loss of $16 million. "Our enthusiasm is dampened," said CEO Tim Wadhams.
Beset by the sluggish U.S. housing market and bedeviled by rising wood and other commodity prices, Masco saw North American sales decrease 7 percent, to $1.333 billion, even as international sales rose 4 percent, to $439 million. Masco reported a net loss for the quarter of $16 million, after gains of $17 million from financial investments. During the first quarter of 2011 Masco incurred costs and charges of $32 million related to plant closurs and consolidations.
"Depressed new home construction, the deferral of 'big ticket' repair and remodel activity and commodity cost pressures have continued into 2011," said Wadhams. While sales were down 4 percent overall, "excluding cabinet products that we are exiting, as previously announced, our sales would have been down just one percent compared to a relatively strong first quarter of 2010." That period saw a boost in cabinet sales from the first time home buyer tax credit.
Wadhams said Masco's North American cabinet business and its installation business gained market share since the fourth quarter of 2010.
Since 2006 Masco has closed 23 manufacturing facilities; also, since 2006, it has closed approximately 100 locations formerly operated by its installation services segment. In 2010, Masco began combined its North American retail and builder cabinet businesses to form Masco Cabinetry, while discontinuing manufacture of ready-to-assemble and other non-core in-stock assembled cabinet product lines.
Also last year, Masco closed an idle cabinet manufacturing facility, is currently in the process of ramping down its 3-million-square-foot Mill's Pride manufacturing compound in Waverly, OH, and has continued to focus on cost structure and process improvement through the Masco Business System integrated leadership practices, processes, tools and capabilities. The company says it is pursuing a strategy of growing organic sales based on a better understanding of customer needs and investing in new product innovation.
"While we still believe that the second half of 2011 will be stronger than the first half, our enthusiasm has been tempered somewhat," Wadhams said. "Job growth has been modest at best, energy costs have increased, reflecting the turmoil in the Middle East and most economists have reduced their forecasts for 2011, including for housing starts."
Have something to say? Share your thoughts with us in the comments below.