Oct 29 - Home improvement firm Masco MAS.N slightly lowered its annual adjusted profit forecast and missed third-quarter estimates on Wednesday, as higher costs hurt margins in its plumbing business and demand for decorative products stayed weak.
WHY IT'S IMPORTANT
U.S. President Donald Trump's sweeping tariffs including 50% on copper pipes and wiring, 25% on kitchen cabinets and 10% on softwood lumber have posed significant challenges for home builders and home improvement firms that rely heavily on these commodities.
Many homeowners, especially from lower-income households, are postponing big housing renovation projects, leading to softer demand for discretionary products.
CONTEXT
In July, Masco forecast an about $140 million hit from tariff-related costs in 2025, mostly affecting the second half of the year.
To counter soaring commodity costs and mitigate tariff impacts, Masco has increased prices on commodities such as faucets and bath hardware as part of its cost-cutting strategy.
The company has also been focused on reducing its China exposure by about 45% since 2018. Most of its international manufacturing facilities are in China and Europe.
Its quarterly gross margin contracted 240 basis points to about 34.2%.
MARKET REACTION
Shares of the company were down about 7% in premarket trading.
BY THE NUMBERS
Masco now expects annual adjusted profit between $3.90 and $3.95 per share, compared with its previous forecast of $3.90 to $4.10 per share.
The plumbing products segment, a major revenue contributor, posted adjusted operating margin of 16.4%, lower than 19.9% a year ago.
Sales in Masco's decorative architectural products segment fell 12%, in local currency, for the quarter ended September 30, compared with a 3% decline a year ago.
The company posted quarterly sales of $1.92 billion, compared with analysts' estimates of $1.94 billion, per data compiled by LSEG.
Its adjusted profit of 97 cents per share missed estimates of $1.03 per share.
(Reporting by Koyena Das and Anuja Bharat Mistry in Bengaluru; Editing by Devika Syamnath)
((koyena.das@thomsonreuters.com))