Steelcase feels pinch of European crisis
The continuing economic crisis in Western Europe is affecting Steelcase office furniture sales, according to the company’s second-quarter financial report.
Steelcase (NYSE: SCS) revenue in the quarter was $757.6 million with net income of $27.6 million, or 22 cents per share, including restructuring costs of approximately 2 cents per share. Earnings per share were consistent with company expectations despite revenue falling short in the EMEA region that includes Europe, the Middle East and Africa, as well as the Asia Pacific region.
“We have tremendous confidence in our global strategy, yet our consolidated results continue to be negatively impacted by the economic crisis in Western Europe,” said James Hackett, CEO.
“The Americas outperformed our expectations with an operating income margin of 14 percent, the highest result for any of our segments in the last decade. In contrast, our EMEA results reflect a significant operating loss, despite the great work of our resident teams to position our business for the eventual economic recovery in Western Europe.”
Last year, Steelcase reported $744.9 million of revenue and earnings of 23 cents per share in the second quarter, including restructuring costs of approximately 2 cents per share.
Organic revenue growth over the prior year was modest after adjusting for $5.2 million of favorable currency translation effects and a favorable impact of $4.2 million from dealer acquisitions, net of a divestiture. The Americas organic revenue growth was 4 percent compared to the prior year and reflected a favorable business mix, according to Steelcase. EMEA experienced a 13 percent organic revenue decline, which compared to significant revenue growth in the prior year. Revenue continued to include a higher than normal mix of project business from some of the company's largest corporate customers.
Current quarter operating income of $52 million compares to operating income of $46.8 million in the prior year. Excluding restructuring costs, second quarter adjusted operating income of $55.3 million compares with $50.5 million in the prior year. Exceptionally strong adjusted operating income in the Americas was partially offset by adjusted operating losses in EMEA and Asia Pacific.