Oct. 4 (Bloomberg) -- Fortune Brands Home & Security Inc., the maker of Moen faucets and Master Lock padlocks, fell as much as 10 percent on its first trading day following its spinoff by Fortune Brands Inc.
The shares declined 57 cents, or 4.6 percent, to $11.73 at 11:33 a.m. in New York Stock Exchange composite trading, after earlier dropping as much as $1.25. The stock now trades under the symbol FBHS.
The separation of Fortune’s home business comes after purchases of new houses sank in August to a six-month low. The company can operate profitably in this environment after cutting costs and introducing new products such as Martha Stewart Living kitchen cabinets at Home Depot Inc., Chief Executive Officer Chris Klein said yesterday in an interview.
“Some look at us and say there is huge upside in the business,” Klein, 48, said by telephone. “Others might say now is not the time.”
U.S. housing starts will fall below 600,000 in 2011 for the third straight year, compared with a 50-year average of 1.5 million starts, Klein said. Spending on home repair and renovation is growing about 2 percent a year, or less than half of historic levels, he said.
“Eventually we will return to a market that looks robust,” Klein said. “We’ve been in this kind of market for three years.”
Fortune announced last year that it would split into separate businesses and focus on distilled spirits after activist investor William Ackman acquired a stake. The Deerfield, Illinois-based company sold its Titleist golf unit for $1.23 billion earlier this year.
Peter Lisnic, an analyst at Robert W. Baird & Co. in Chicago, initiated coverage of Fortune Brands today with a “neutral” rating. Expansion into new businesses that may generate $200 million to $300 million is slowed by “the slope of the recovery in the company’s primary end markets,” Lisnic wrote in a note to investors today.
Beam Inc., which also became a separately traded company, advanced $1.51, or 3.6 percent, to $43.41 on the New York Stock Exchange. Its ticker is BEAM.
--Editors: James Callan, Kevin Orland
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