Rubbermaid maker's shares tank after Hurricane Harvey disrupts supply chain

Key Points
  • Newell Brands said Wednesday "nearly all" its resin suppliers in Louisiana and Texas are shut down.
  • The maker of Rubbermaid storage containers and other household products now expects higher resin costs in the final half of 2017.
  • CEO Michael Polk said his company still plans to "sustain increased investment" through the end of the year despite the higher prices.
Rubbermaid factory workers. The photo was taken pre-coronavirus.
Ty Wright | Bloomberg | Getty Images

Shares of Newell Brands are down more than 4 percent in midday trading Wednesday after the company said Hurricane Harvey threw off its manufacturing supply chain in Louisiana and Texas.

The maker of household goods such as Rubbermaid storage containers and Coleman grills released a statement saying continued shutdowns of "nearly all of Newell Brands' resin suppliers" in the two states are unexpectedly driving up costs.

"We expect these conditions to persist through the fourth quarter of 2017 and resin inflation to now build, rather than contract as previously forecast," CEO Michael Polk said.

Most of Newell Brands' Louisiana and Texas facilities declared "force majeure," and are not operating. The company is beginning to supplement the gap in its support through other U.S. and overseas suppliers, but said it is doing so "at a significantly higher" cost than it anticipated.

Newell Brands lowered its earning per share guidance for the year as a result of the hurricane, to a range of $2.95 to $3.05 from a range of $3 to $3.20.

Despite the disruption and increased costs, Polk said the company will "sustain increased investment" in the last two quarters of 2017 to improve "share momentum."

Through Tuesday, Newell Brands stock was up 9 percent this year, according to FactSet.