In the second quarter, Newell Brands posted results that were better than Wall Street anticipated as the company continued its restructuring initiative.
A Yahoo Finance-published analyst consensus estimate for the second quarter called for adjusted diluted earnings per share of 13 cents and revenues of $2.15 billion.
Net sales were $2.2 billion, a 13% decline in the quarter year over year, largely reflecting a core sales decrease of 11.9% and the impact of unfavorable foreign exchange, Newell stated. Reported operating income was $120 million compared with $328 million in the period a year past while adjusted operating income was $201 million compared with $355 million.
In the Home and Commercial Solutions operation, net sales were $1.06 billion and operating loss was $21 million versus net sales of $1.24 billion and operating income of $74 million the quarter a year before, the company maintained. Adjusted operating income was $23 million versus $87 million in the year-previous period.
In the Outdoor and Recreation operation, net sales were $333 million and operating income was $5 million versus net sales of $427 million and operating income of $48 million the year-before quarter, the company indicated. Adjusted operating income in the quarter was $14 million versus $54 million in the period a year previous.
In January 2023, Newell announced a restructuring and savings initiative, Project Phoenix, designed to strengthen the company by leveraging scale to reduce complexity, streamlining the operating model and driving operational efficiencies.
In announcing the financial results, Chris Peterson, Newell president and CEO, said, “Since my appointment two months ago, we have created and deployed a new corporate strategy based on a comprehensive company-wide capability assessment. Building on the solid operational foundation we have already put in place, we are now focused on significantly strengthening the company’s consumer-facing capabilities while prioritizing the top 10 countries and top 25 brands, which represent about 90% of sales. Consistent with the new strategy, we are investing in consumer and customer understanding, brand building, brand communication, innovation, and retail execution as part of our One Newell approach to unlock the full power of our leading consumer brands, create and leverage scale and drive operational excellence. While we have lots of work to do, we are off to a great start, which is why I remain confident in our ability to accelerate the company’s financial performance over the long term while we continue to navigate through a challenging macroeconomic backdrop in the near term.”
Mark Erceg, Newell CFO, added, “Restoring strong operating cash flow and improving the underlying structural economics of our business remains our primary financial focus this year. Against those two measures, we were very pleased with our second quarter results, with operating cash flow up over $500 million dollars versus last year and normalized operating margin ahead of expectations. As we look toward the balance of the year, we expect top and bottom-line pressure to persist as consumers continue to wrestle with elevated levels of core inflation and the resumption of student loan repayments. Despite these pressures, and because of the conviction we have behind our new strategy, we have chosen to invest more behind capability building and brand support during the second half of the year. While some of these investments will lower near-term earnings, we remain confident in our operating cash flow guidance for the full year and, just as importantly, because of the meaningful interventions we are making across all facets of the business, we expect second half normalized operating margin to be up significantly versus both the first half of this year and the second half of last year.”
