(Reuters) - Heating and refrigeration products distributor Watsco Inc (WSO.N) reported a lower-than-expected rise in quarterly profit as it sold more low-margin products, and cut its full-year forecast on slackening demand.
Watsco shares fell as much as 15 percent and were trading at $68.03, down 10 percent, late morning on Wednesday.
The company now expects per-share earnings of $3.15 to $3.25 for the year, down from the $3.25 to $3.40 it estimated earlier.
“There is a problem with consumer confidence out there. We know there is an enormous amount of pent-up demand. I don’t think we are seeing any sign of that coming in large numbers,” Chief Executive Albert Nahmad said on a conference call
Meanwhile, gross profit margin for the second quarter fell to 23.6 percent from 24.1 percent a year earlier as heating, ventilation and air conditioning (HVAC) equipment and commercial products increased their shares in the overall sales, the company said.
“Gross profit that you see really is a consequence of the equipment business growing substantially higher than the non- equipment business,” Nahmad said.
The Miami, Florida-based company earned $39.1 million, or $1.15 a share in the second quarter, missing analysts’ expectations of $1.30 per share. It had a profit of $36.0 million, or $1.09 a share, in the year-ago period.
Revenue rose 15 percent to $1.01 billion, while analysts had expected $1.05 billion, according to Thomson Reuters I/B/E/S.
Reporting by Suzannah Benjamin in Bangalore; Editing by Sreejiraj Eluvangal