Grainger 4Q profit drops 10 pct; raises 2010 forecast with sales rebounding to close out year

Grainger 4Q profit dips; outlook raised

LAKE FOREST, Ill. — W.W. Grainger on Tuesday said its fourth-quarter profit fell 10 percent on higher costs, though the industrial maintenance company raised its outlook for this year.

The plight of industrial and commercial customers has filtered down to supply companies like Grainger, based in Lake Forest, Ill., as companies cut back on spending.

Grainger pared back its own work force by 200 people and took a $7.5 million charge that amounted to 5 cents per share in the quarter. The company cut 600 positions in all last year, amounting to $18 million in severance, or 11 cents per share.

While job growth will lag any recovery, Chairman and CEO Jim Ryan said stronger sales over the past two months led the company to boost its per-share expectations for 2010 to between $5.40 and $5.90, from earlier forecasts of $5.30 to $5.80.

That is at the high end of Wall Street expectations around $5.87 per share.

For the final three months of 2009, Grainger said it earned $97 million, or $1.27 per share, down from $107.9 million, or $1.37 per share in the 2008 fourth quarter.

Sales rose 3 percent to $1.62 billion from $1.59 billion the year prior, helped by contributions from acquisitions, a benefit from foreign exchange rates and a lift from price increases.

Analysts polled by Thomson Reuters, on average, expected a profit of $1.24 per share, on sales of $1.59 billion.

Quarterly sales fell 2 percent in the U.S. to $1.38 billion. Sales in Canada rose 11 percent to $180.4 million. Sales elsewhere, including Japan, Mexico, India, Puerto Rico, China and Panama, more than doubled to $79.7 million.

For the year, the company earned $430 million, or $5.62 per share, down from $475 million, or $5.97 per share in 2008.

The company now expects sales to rise between 6 percent and 10 percent for the year, implying sales between $6.6 billion and $6.84 billion. That’s up from a prior forecast for a 4 percent to 9 percent increase.

Grainger shares closed Monday at $100.94, up 4.2 percent since the start of the year.

Shares fell 64 cents to $100.30 Tuesday.