Illinois Tool 4Q Net Down 50%; Again Cuts 09 View; Weak 1Q

   DOW JONES NEWSWIRES 
 

Illinois Tool Works Inc.'S (ITW) fourth-quarter net income tumbled 50% on slumping sales and the stronger dollar, in a fresh sign of the toll the slumping economy is taking on the industrial sector.

The bellwether toolmaker again slashed its 2009 outlook and gave a first-quarter outlook below Wall Street's estimates, and its shares were off 4.9% at $33.20 in recent premarket trading.

The company expects broad-based weakness to continue in its end markets this year.

Net income was $233.8 million, or 46 cents a share, down from $470.7 million, or 87 cents a share, a year earlier.

Revenue fell 5.9% to 3.68 billion, with the unfavorable currency-exchange rate contributing 4.5 percentage points to the decline.

Earnings from continuing operations were boosted by a lower tax rate to 54 cents a share - beating the company's forecast, slashed in early December, of 44 cents to 52 cents a share on a revenue drop of 7% to 9%.

Operating margin fell to 34.4% from 35.6%, reflecting higher than expected restructuring costs and acquisition-related costs and declining end markets.

Sales in the power systems and electronics segment fell 9.6%.

Like other manufacturers and industrial conglomerates, Illinois Tool has been hard hit as customers sharply reduce orders. In mid-December, it said end-market revenue could fall by 5% to 10% next year.

For 2009, Illinois Tool again lowered its outlook for earnings from continuing operations to $1.84 to $2.48 a share, on an expected revenue drop of 6% to 12%. In December, it slashed its earnings forecast for the second time in two months to a range of $2.94 to $3.02 a share.

For the first quarter, it sees earnings from continuing operations of 26 cents to 42 cents a share. Analysts were expecting 47 cents.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; [e-mail]

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