Steelcase Sees Gradual Recovery

June 24, 2003
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GRAND RAPIDS — Steelcase Inc. appears on the verge of a rebound, executive say, as the economy begins to show signs of picking up.

Even as the company reported yet another decline in quarterly sales and a net loss, executives offered some hope that the worst-ever downturn in the office furniture industry’s history is beginning to ease.

Steelcase has experienced higher order volumes since early in the first quarter and entered the second quarter on June 1 with a stronger order backlog than in previous periods, the company stated in its quarterly earnings release issued Monday night. For the current second quarter, Steelcase expects revenues to grow 10 percent over the first quarter.

“We are seeing a sustained higher order rate and a growing backlog in North America, which is consistent with recent increases in broader economic metrics,” Steelcase Chief Financial Officer James Keane said. “It appears a gradual industry recovery may now be underway in the North American segment of our business.”

Steelcase reported a net loss of $13.4 million, or 9 cents per share, for the quarter that ended May 30. The result is in line with earlier guidance and includes a net pre-tax charge of $9 million, compared with the net loss of $15.4 million, or 10 cents per share, during the same quarter a year ago, albeit on sharply lower revenues.

Steelcase’s sales for the quarter fell 11.1 percent to $571.9 million, from $643.1 during the same period in the previous fiscal year.

“Our first quarter results reflect the difficult economic environment we anticipated, particularly in North America,” Keane said. “We responded to these challenges with actions that reduced our costs in the short- and long-term.”

Steelcase expects to break even for the current second quarter, even with an anticipated $5 million pre-tax charge for restructuring, and post a profit for the entire fiscal year.

“We are preparing for recovery and growth,” President and Chief Executive Officer Jim Hackett said.

Steelcase was the first of the two largest publicly held office furniture manufacturers to release their latest quarterly results. Holland-based Herman Miller Inc. will announce second quarter sales and earnings figures on Wednesday afternoon.           

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