Sales flat at Masco in Q3
Masco Corp. has reported net sales of $1.976 billion for its third fiscal quarter, which were flat compared with sales of $1.978 billion in the third quarter a year ago. North American sales increased 4% and international sales decreased 12%. In local currencies, international sales decreased 3% compared with the third quarter of 2011.
Net income reported for the third quarter, which ended Sept. 30, was $15 million, compared with $36 million during the corresponding quarter last year.
Installation and paint were strong performers in the quarter, posting 9% and 6% in revenue growth, respectively. Sales of plumbing products slipped 4%, and the cabinet division posted a 5% decline in sales.
“Our top line in the third quarter benefited from the increase in new home construction activity in North America, new product introductions, and from selling price increases,” said Masco’s CEO, Tim Wadhams. “These positives offset both the slow economic growth in North America and the continued weakening of Euro-Zone economies that we anticipated for the second half of 2012.
“We continue to make progress on our strategic initiatives, which include leveraging our brands, reducing our costs, improving our Installation and cabinet segments and strengthening our balance sheet,” Wadhams continued. “We are encouraged by the continued strength in new home construction activity, driven by the stabilization and improvement of home prices in many areas of the U.S., increasing affordability and demographic trends. These factors should continue to drive demand for new homes over the next several years. Increased new home construction activity benefits virtually all of our businesses, particularly our installation segment which has improved significantly this year, almost breaking even in the third quarter and which we expect to be profitable in the fourth quarter.
“In our cabinet segment, we announced actions during the quarter, including the closure of a manufacturing location and a headcount reduction, which we expect will improve our efficiency and reduce costs by approximately $20 million on an annual basis. While we are committed to returning our cabinet segment to profitability, we anticipate that big ticket remodeling will remain weak, even though we continue to see modest improvement in overall repair and remodeling activity.”
Plastic pipe will continue to dominate market in years ahead
The nation’s aging water pipe network, coupled with a turnaround in building construction, will boost the annual demand for pipe by 6.3%, according to a report by the Freedonia Group, a Cleveland-based industry market research firm.
Plastic pipe will experience the fastest growth through 2016. Resin improvements that enhance performance will enable plastic pipe to continue to take market share from other pipe materials. Additionally, processing improvements will allow plastic pipe to be a more cost-effective option compared with other materials. Polyvinyl chloride (PVC), which accounted for more than one-half of all plastic pipe demand in 2011, will remain the leading plastic resin based on PVC’s use in small diameter applications in the potable water distribution, sanitary sewer and agricultural markets, according to the report. Going forward, PVC demand will increase at a nearly double-digit rate, benefiting from the recovery in building construction activity.
High density polyethylene (HDPE) pipe was the second leading plastic pipe in 2011. Advances in HDPE pipe demand will result as the material continues to supplant concrete.
Steel pipe will continue to be the leading pipe material in value terms, accounting for $28.5 billion in 2016. However, growth in steel pipe demand will trail the pipe market as a whole, since it is not a beneficiary of the rebound in housing construction. Nevertheless, steel will continue to dominate the oil and gas market and is expected to benefit from continued exploration and drilling activity — especially in shale gas plays.
Concrete, ductile iron and copper pipe are all forecast to post above-average growth. Concrete and ductile iron pipe maintain a commanding share of the large diameter sewer, drainage and water transmission market, while copper is the primary material used in refrigeration equipment.
Frank Blake addresses Virginia Commonwealth University
Home Depot chairman and CEO Frank Blake addressed the Virginia Commonwealth University School of Business on Oct. 25, joined by his son, Home Depot district manager Frank Blake Jr., who also serves as an adjunct professor in the School of Business’ Executive M.B.A. Program. The senior Blake spoke as part of the business speaker series at the Charles G. Thalhimer Family Executive-in-Residence program.
Blake talked about the steps to building a workplace culture, using Home Depot as an example. He touched on the now-familiar model of the inverted pyramid, where customers sit at the top, above front-line employees and then field support and the corporate office. The CEO’s office is the foundation — and the bottom level — of the pyramid.
Prior to become the home improvement retailer’s top executive, Blake previously served as deputy secretary for the U.S. Department of Energy (DOE), and prior to that, he worked in a variety of executive roles at General Electric. His public sector experience also includes having served as general counsel for the U.S. Environmental Protection Agency (EPA), deputy counsel to Vice President George Bush and law clerk to Justice John Paul Stevens of the U.S. Supreme Court.