Steelcase Earnings Report Mixed

September 25, 2003
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GRAND RAPIDS — Steelcase Inc. saw sales decline again from year-ago levels during the most recent quarter, although the company reported a sequential increase from the previous three-month period.

Steelcase on Wednesday afternoon reported second quarter revenues of $612.1 million, down 5 percent from the $644.2 million during the same period a year earlier. The company did post a strong 10.2 percent increase in sales from the first quarter to the second quarter of fiscal year 2004.

Year-to-date sales of $1.16 billion were down 8.1 percent from the $1.27 billion through the first six months of FY 2003.

Net income, including a mix of one-time gains and charges and the recent sale of the Attwood Corp. marine products unit, totaled $18.1 million, or 12 cents per share, for the quarter that ended Aug. 29. That compares with a net loss of $7.3 million during the same period a year ago.

The quarterly earnings report included an overall net after-tax gain of $16 million.

Through the first six months of the fiscal year, Steelcase reported net income of $4.7 million, which compares to a loss of $22.7 million during the same period a year earlier.

In the third quarter, Steelcase expects sales to come in “flat or up slightly” from the second quarter and earnings “to be just above breakeven,” including pre-tax restructuring charges of $5 million to $7 million and “ongoing inefficiencies” relating to plant consolidations, the company said.

As the office furniture industry remains mired in the unprecedented downturn, order rates during the second quarter were up slightly quarter-to-quarter, then became volatile during the early weeks of the third quarter.

“We are seeing some signs that business capital spending is finally beginning to recover in the United States,” Chief Financial Officer James Keane said. “Although we believe increased spending on office furniture will generally lag other categories, we are expecting a modest increase in second half shipments, including projects we have already won. International markets are not yet showing the same signs of improvement in overall economic indicators.”           

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