Grainger 3Q earnings up 4%, topping estimates

By Reuters
Posted Oct. 14, 2010 at 11:45 a.m.

WW Grainger Inc. posted better-than-expected quarterly results and raised its full-year outlook for the second time this year, but its shares fell 3 percent as the industrial distributor forecast a moderation in fourth-quarter organic revenue growth.

Grainger, considered an industrial bellwether, said lower sales contribution from products used to clean up the Gulf of Mexico oil spill and a slowing inventory build cycle would slow the pace of growth.

The company had benefitted from the sale of safety-related items for the oil spill clean-up in the Gulf of Mexico in the third quarter. [ID:nSGE67A0GE]

The U.S. manufacturing sector has held up well during an uneven economic recovery and should continue to expand, but likely at a slower pace, according to a quarterly survey by Manufacturers Alliance/MAPI.

The research group’s September 2010 index fell to 77 percent from a record high 81 percent in June, but remains well above year-ago figures.

Shares of Grainger have gained 17 percent since it raised its full-year outlook mid-July. The broader Dow Jones U.S. Industrial Suppliers Index .DJUSDS rose 11 percent during the same period.

In a separate statement, Grainger said it acquired online safety and risk management company SafetyCertified Inc. Grainger did not disclose the terms of the deal.

Grainger offers over 900,000 products and sells almost everything from abrasives to refrigerants to vacuum valves. For full-year 2010, Grainger forecast earnings of $6.40-$6.70 a share, excluding unusual items, on sales growth of 14-15 percent. It had earlier forecast 2010 earnings of $6.10-$6.40 a share, on sales growth of 12-14 percent.

Grainger which offers products such as oil booms, degreasers and safety supplies, reported third-quarter earnings of $150.4 million, or $2.06 a share, compared with $144.6 million, or $1.88 a share, a year ago.

Excluding items, it earned $1.99 a share for the latest third quarter.

Sales rose 19 percent to $1.9 billion. Sales from the United States rose 15 percent to $1.61 billion.

Analysts on average were expecting earnings of $1.82 a share, excluding items, on revenue of $1.87 billion, according to Thomson Reuters I/B/E/S.

Shares of Chicago-based Grainger were down about 3 percent at $121.94 in morning trade on the New York Stock Exchange.

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