Newell shares down on Venezuela hit to 2010 profit

NEW YORK (Reuters) - Newell Rubbermaid Inc posted a fourth-quarter profit on cost cuts and lower raw materials prices, but the maker of Rubbermaid containers and Sharpie pens said the devaluation of Venezuela's currency would hurt 2010 earnings, sending its shares down nearly 4 percent.

While Venezuela accounts for only about 1 percent of overall sales, Chief Executive Officer Mark Ketchum said on a conference call that the country was a lucrative market and disproportionately affected Newell's earnings.

The consumer products company expects 2010 profit of $1.35 to $1.45 per share, up from $1.31 in 2009, but below the average Wall Street forecast of $1.47, according to Thomson Reuters I/B/E/S.

The devaluation of the Venezuelan bolivar has shaved off 4 cents to 5 cents per share from the outlook, Newell said.

Since analysts did not factor the bolivar devaluation into their estimates, Newell's forecast is "roughly in line" if that impact were excluded, said Morgan Stanley analyst Dara Mohsenian.

Newell shares were down 3.6 percent at $13.69 on the New York Stock Exchange.

Other U.S. consumer product companies have also warned the bolivar's devaluation would strike their bottom lines in 2010.

On Thursday, Procter & Gamble Co estimated the impact on profit at 5 cents to 10 cents per share and said it could cut sales by about 1 percent. The company said a high degree of uncertainty remains in Venezuela.

Colgate-Palmolive Co , which derives about 6 percent of its sales in Venezuela, said on Thursday that it anticipated the Venezuelan devaluation would cut 2010 earnings per share by 6 cents to 10 cents.

BETTER MARGINS

Ketchum said in a statement that Newell had won market share in the majority of its businesses despite what he called a challenging year.

The Atlanta-based company said its gross margin had risen by 7 percentage points to 37 percent, an improvement it attributed in part to its exit from certain low-margin product lines such as some plastic chair mats and some plastic storage totes.

Newell "has made solid progress in working capital management, cost control, and operating cash flow generation," BMO Capital Markets analyst Connie Maneaty wrote in a note.

The company expects margins to rise by 0.75 to 1.00 percentage point in 2010, while it anticipates core sales, which exclude discontinued lines, to increase at a low single-digit percentage rate.

Newell reported earnings of $60.6 million, or 20 cents a share, for the fourth quarter, compared with a year-earlier loss of $256.7 million, or 92 cents a share.

Excluding one time items, the company earned 27 cents a share, in line with the analysts' average forecast.

Net sales fell 2 percent to $1.42 billion, but were above analysts' expectations of $1.41 billion.

(Reporting by Phil Wahba; additional reporting by Dhanya Skariachan and Jessica Wohl; Editing by Derek Caney and Lisa Von Ahn)

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