(Adds comment, changes dateline to Atlanta)
By Karen Jacobs
ATLANTA, June 26 (Reuters) - Snap-on Inc. , which makes repair tools for automobiles, on Thursday cut its full-year earnings forecast due to weakness in its commercial and industrial segment, sending its stock down 5.5 percent.
The company also said second-quarter profit would fall below analysts' estimates as it cuts about 100 jobs.
Senior executives told a conference call that industrial weakness in North America and Europe has hurt sales of big-ticket capital goods equipment. Government sales are down as a result of budget cuts.
Snap-on reduced its full-year earnings-per-share outlook to a rise of 5 percent to 10 percent from 10 percent to 15 percent.
Alex Paris, an analyst at Barrington Research, said sales of industrial tools and other big-ticket equipment had not recovered in the second quarter.
"This has been the depressed part of their business all along," said Paris. "The economic news just hasn't turned up yet." He estimated that the commercial and industrial segment accounts for at least 35 percent of Snap-on's revenue.
Paris expected Snap-on's results to improve in the second half if the economy strengthens.
Snap-on forecast second-quarter earnings in the range of 36 cents to 40 cents, as commercial and industrial sales fall below year-earlier levels.
Analysts, on average, expected profit of 49 cents a share for the second quarter, according to research firm Thomson First Call. Snap-on earned $29.2 million, or 50 cents a share, on sales of $547 million in the 2002 second quarter.
Kenosha, Wisconsin-based Snap-on said it was hopeful that U.S. tax incentives would spur equipment spending and lead to a recovery by the end of the year.
Toolmakers, hurt by lower capital spending and weak economic conditions, are trying to reduce costs. Stanley Works said in May it expected second-quarter earnings below analysts' consensus estimates and was laying off staff and closing a business.
Black & Decker Corp. told analysts last month that while 2003 sales would be little changed, it expects higher profits as cost cuts improved profit margins.
Snap-on shares fell $1.69 to $29.12, while Stanley Works was off 5 cents to $27.40 and Black & Decker added 46 cents to $42.90, all on the New York Stock Exchange. (Additional reporting by Anupama Chandrasekaran)