Steelcase Turns Quarterly Profit

April 1, 2003
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GRAND RAPIDS — Steelcase Inc. ended the fiscal year by moving back into the black and posting a quarterly profit for the first time in a year, although red ink may reappear in the current quarter.

Steelcase on Monday night reported a $2.8 million, or 2-cents-per-share, profit for the fourth quarter that ended Feb. 28. The results easily exceeded the company’s previous guidance, as well as brokerage analysts’ expectations of a loss of 9 cents per share.

The company attributed the performance to higher than expected sales volumes and realizing the savings from cost-cutting moves made during the year faster than expected.

“I’m proud of the Steelcase employees around the world who have worked so hard to return the company to profitability this quarter despite less volume than in the same quarter last year,” Steelcase President and CEO Jim Hackett said. “We are successfully managing through the challenging impacts of record low levels of business capital investment and the worst-ever downturn in our industry.”

The earnings report included one-time after-tax gains totaling $14.8 million that pushed net income for the quarter to $17.6 million, or 12 cents per share. Among the one-time gains was $10.9 million generated through the sale of real estate and $3.9 million from the sale of leased assets.

The results for the fourth quarter of the 2003 fiscal year compares with a net loss of $34.3 million, or 23 cents per share, during the same period a year earlier that included $20.1 million in one-time after-tax charges.

Steelcase’s sales for the quarter totaled $637.8 million, down 3.4 percent from the $660.4 million during the same quarter a year ago, which included one less shipping week Annual sales for the 2003 fiscal year reached $2.58 billion, down 16.3 percent from the $3.08 billion in the previous year. Revenues for the fiscal year include the additional shipping week and $157.1 million from acquisitions.

The quarterly profit helped to limit Steelcase’s loss for the year to $15.2 million, or 10 cents per share. The company posted a mere $1 million in net income in the prior fiscal year.

Looking ahead, Steelcase expects sales for the present first quarter of fiscal year 2004 to track at or above fourth quarter rates, although they could dip as much as 5 percent from the previous period after adjusting for the additional shipping week.

The company expects pre-charge results of break-even to a loss of 5 cents per share for the first quarter. When one-time restructuring charges of $7 million to $10 million are added, Steelcase expects to post a quarterly net loss of $7 million to $17.5 million, or 5 cents to 12 cents per share.

War with Iraq, global economic uncertainty and other factors all could affect the outlook, the company said.

Also during the fourth quarter, Steelcase eliminated another 250 salaried positions, which are on top of the thousands already cut in the more than two years since the office furniture industry’s worst-ever downturn began, and notified 250 hourly employees of possible layoff. The company will also idle its North American manufacturing and office operations for one week this month. 

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