A.O. Smith's quarterly margins hit by higher steel prices

A O Smith

23/07/2024 14:35

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)
 ((Kannaki.Deka@thomsonreuters.com))