A.O. Smith's quarterly margins hit by higher steel prices
July 23 (Reuters) -Water heater maker A. O. Smith reported quarterly earnings that showed it was taking a hit from higher steel prices and a slow recovery in home sales in the United States, its biggest market.
The company's shares were down 6% in early trading.
A. O. Smith now expects its 2024 adjusted profit to be between $3.95 and $4.10 per share, compared with its earlier forecast of $3.90 to $4.15.
The company in the second quarter had been hit by a slow recovery in the residential housing market in the United States and high prices of steel, which is its primary raw material.
Quarterly earnings from the North America segment, which accounted for 75% of 2023 sales, dropped marginally. The segment's margins fell to 25.1% from 27.6%.
"The year-over-year decreases in segment earnings and segment margin were in line with expectations and were largely a result of higher material costs, primarily steel, and higher selling expenses," A. O. Smith said.
A protracted downturn in the Chinese real estate sector impacted its sales in the international segment.
The company reported adjusted earnings of $1.06 per share in the second quarter, in line with analysts' estimates, according to LSEG data.
Sales of $1.02 billion beat estimates of $997.8 million.
Reporting by Kannaki Deka in Bengaluru; Editing by Shreya Biswas
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