Newell Brands' sales jumped by 165.0 percent for the fourth quarter of 2016 to $4,136 million, thanks to the recent acquisition of the Jarden Corporation's business. Core sales grew by 2.5 percent, driven by strong results from the Writing, Baby, Home Solutions and Outdoor Solutions businesses, offset by weak sales in the Tools segment.
The new entity was formed early last year by the merger of Newell Rubbermaid and Jarden, which includes Jarden's $2.74-billion-a-year Outdoor Solutions segment. Over the summer of 2016, it completed a strategic assessment of the company and has since put into action a new strategy designed to strengthen the portfolio through new acquisitions and divestitures.
As reported, Newell Brands plans to sell about 10 percent of its portfolio, including its winter sports business, its heaters, humidifiers and fans business within the Consumer Solutions Segment and the Rubbermaid Consumer Storage business within the Home Solutions segment. The winter sports business that is for sale includes the Marker/Völkl/Dalbello group and the K2 Sports group, which comprises K2, Line, Full Tilt and Madshus.
We understand that the first group is more profitable than the second one, and that Goldman Sachs has already started to collect expressions of interest, preferring to sell both of them to the same buyer rather than separately.The closing of of a deal could take place in the second quarter of this year, the management indicated.
During the latest quarter, the Outdoor Solutions segment was the main contributor to the group's turnover. Sales increased by 3.8 percent to $730.6 million. Core sales in the pro forma segment - which exclude the K2 Sports and the Marker and Völkl winter sports businesses that are being held for sale - were up by 2.9 percent, primarily driven by high single-digit growth in Fishing, double-digit growth in Technical Apparel and a high single-digit increase in Team Sports, which were partially offset by declines for Coleman, related to changes in distribution.
The group's gross margin dropped by 1.5 percentage points to 36.8 percent, weighed down by costs related to the integration of Jarden. Net income reached $165.6 million, up strongly from $13.2 million during the same period of last year.
Newell also released its results for the full year ended Dec. 31, which showed revenues jumping by 124.2 percent to $13,260 million. The Outdoor Solutions segment was again the shining star, with sales reaching $2.4 billion. Core sales increased by 3.7 percent, boosted by strong results from the Writing, Baby, Branded Consumables, Outdoor Solutions, Consumer Solutions and Process Solutions segments.
In North America, core sales grew by 3.7 percent to $8,713 million. They gained 4.0 percent to $1,503 million in the EMEA region, and they progressed by 10.2 percent to $671.5 million in Latin America. However, in Asia-Pacific, they dropped by 4.4 percent to $591 million.
The gross margin of the group dropped by 5.7 percentage points to 33.2 percent, due to costs related to the integration of the Jarden business. Net income for the year was $527.8 million, compared with $350 million in 2015.
Releasing its guidance for the 12 months ending Dec. 31, 2017, Newell said its sales are expected to grow by between 9.5 and 11.0 percent. The company said these figures reflect an expectation that the sales growth rate will accelerate in its core businesses through the year as the pace of change related to the company's transformation slows. The core businesses' growth in the first quarter should be similar to the growth experienced in the fourth quarter of 2016.