Steelcase earnings show decline

December 22, 2008
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Steelcase Inc. has reported a small third quarter profit of $0.4 million, up from estimates. Still, revenue, which totaled $811.3 million for the third quarter for fiscal 2009, declined 8.4 percent from last year, $885.9 million.

The largest decline came from North American sales, down 11.4 percent; a decrease of 14.8 percent was marked in the “Other” category as compared to last year. There was, however, small growth of 2.3 percent internationally.

There was an increase in cost of sales from 66.5 percent in the prior year to 71.1 percent this year. Gross margin was 28.4 percent of sales in the third quarter, which includes restructuring costs. In 2007 the percent for the same quarter was 33.5 percent. Current year gross profit included $3.8 million of restructuring costs.

There was a decrease in operating expenses of $29.6 million, or 26.5 percent of revenue compared to 27.6 percent in the prior year. Operated income was reported at $15 million, or 1.8 percent of revenue. This also included $4.7 million of restructuring costs.

There was an increase of $91.3 million in the third quarter cash and short-term investments, totaling $220 million. Total debt at the end of the quarter was $255.3 million.

“We believe that the slowing of the global economy and related uncertainly will lead to significant reduction in industry demand for the next several quarters,” said David C. Sylvester, vice-president and chief financial officer. “Accordingly, we have been preparing for a difficult year in fiscal 2010, but believe the strength of our balance sheet will allow us to continue investing in growth initiatives that will further strengthen our leadership position coming out of this economic cycle.”

For the fourth quarter, Steelcase, estimates revenues to range between $650 million and $700 million. The prior year was $901 million. The company also expects a net loss between $0.04 and $0.10 per share in the fourth quarter.

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