Newell Rubbermaid Inc. Q3 2009 Earnings Call Transcript

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2009-10-28 12:17:11.0

Tags: Deutsche Bank AG, Call Transcript, Quarter, Earnings, Newell Rubbermaid Inc., Destocking, Retail, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Bill Schmitz with Deutsche Bank.

Bill Schmitz - Deutsche Bank

Can you just talk about how the production downtime has impacted gross margins and whether or not you expect that trend to continue in the fourth quarter and the next year?

Pat Robinson

It’s been a pretty heavy negative impact for us. As we start the comp against last year’s quarter for, however it will be less and as we get the next year it should be a slight positive for us.

Bill Schmitz - Deutsche Bank

Can you put any numbers behind it?

Pat Robinson

Not only give the specifics around it, but that’s sort of the trend, the trend we’re seeing has been very negative for volume in the plants for last four quarters. It’s stabilized this quarter, and again, be a positive going into next year.

Bill Schmitz - Deutsche Bank

Can you just talk about the level of destocking? Are we done with the destocking? How much is left in kind of where do retailer inventory levels stand right now?

Pat Robinson

Bill, we think the answer is, yes. Destocking is essentially behind us, kind of tailend of it because recall that it started first in retail, and then followed in commercial and we think the commercial now is about at the end of its destocking as well.

Bill Schmitz - Deutsche Bank

How much is left on the sort of project acceleration savings and kind of what are you expecting for next year?

Pat Robinson

We expect about another $50 million incremental next year, and then the tailend will read-through in 2011 just from our actions next year and this is probably about half of that number.

Operator

Your next question comes from Budd Bugatch of Raymond James.

Budd Bugatch - Raymond James

I got a couple of question. First, Pat can you talk a little bit about the Office Products segment in terms of the margin, I know the operating margin was 70 basis points better than last year, but last year was an unusual year, and usually between second quarter and third quarter, the rate of decline in op margin is not as high as it was this year. I think this year is the highest that at least I’ve gotten in memory. I think around 800 basis points from second quarter to third quarter. Was there something going on that caused that? How do we look at that going forward?

 

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