A.O. Smith

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cut its third-quarter and full-year earnings estimate, citing sales disruptions in a line of gas water heaters and costs associated with moving its electric motors unit overseas.

Milwaukee-based A.O. Smith now expects to earn 18 cents to 20 cents a share in the third quarter and $1.75 to $1.80 a share in 2003. It had previously estimated third-quarter earnings of 42 cents to 46 cents a share and 2003 earnings of $2.10 to $2.25 a share. Analysts surveyed by Thomson First Call were forecasting earnings of 44 cents a share in the quarter and $2.13 a share in the year.

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The company launched a flammable-vapor resistant water heater in the third quarter, causing customers to load up on an earlier model in the second. "The resulting sales reduction in the third quarter, coupled with the disruption in manufacturing schedules caused by the pre-buy activity and the launch of the new product, caused sales and profit levels to be lower than anticipated," the company said.

The company said it mostly completed a planned move of U.S. production in its electric motors division to Mexico, but said manufacturing costs were somewhat higher than anticipated during the final stages. That also hurt overall profitability.