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Sunday, 06 January 2013 23:13

Office furniture makers upbeat despite challenges

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WEST MICHIGAN — Steelcase Inc. is expecting a relatively flat sales pace for the present quarter, while rival Herman Miller Inc. anticipates solid growth, part of which will come from making up sales that were delayed by Hurricane Sandy on the East Coast.

The Zeeland-based Herman Miller missed its own sales and earnings projections for the September-to-November second quarter of its 2013 fiscal year. In reporting a sight sales decline, the company cited the $5 million to $7 million hit to revenues from delays in installing products at clients affected by the storm.

Long lead times for some installations and European economic problems also contributed to the sales dip.

Herman Miller projects better results in the present third quarter with sales of $430 million to $450 million, an increase of 7.5 percent to 12.5 percent over a year ago.

In a conference call with analysts, executives pointed to solid growth in the second quarter in the incoming order rate and backlogged orders that foretell solid gains in the months ahead.

“While we don’t like missing for any reason, ultimately orders and backlog will become revenue. So, if orders are moving in the right direction, we will convert them into revenue and profit growth through the balance of the year,” Herman Miller President and CEO Brian Walker told analysts. “The orders and backlog generated this past quarter are a strong validation of both our strategic direction and momentum, domestically and internationally.”

Herman Miller finished the quarter with $475.8 million in orders, up 8.1 percent from a year earlier, and a backlog of $314.2 million, 11.9 percent higher than the same period in FY 2012.

The company reported quarterly sales for the most recent period of $441.8 million, down 0.9 percent from the $445.6 million of a year earlier. Quarterly net income totaled just $8.4 million, compared to $23.7 million a year earlier.

Sales for the first six months of the fiscal year were off 1.4 percent to $891.5 million. The company reported year-to-date net income of $28.3 million.

Both Herman Miller and Steelcase reported results for their latest quarters just before the Christmas holiday.

The Grand Rapids-based Steelcase reported sales of $727.2 million for the third quarter of its 2013 fiscal year, up 1.1 percent from the $719.4 million a year earlier. Steelcase had quarterly net income of $23.6 million, versus $22.4 million a year earlier.

The company’s order backlog was up 9 percent from a year earlier in the business unit that covers North and South America.

Nine-month sales for the fiscal year were up 4.3 percent to $2.14 billion and net income totaled $104.5 million, compared to $78.6 million a year earlier.

Steelcase projected sales of $695 million to $720 million for its present fourth quarter, which represents flat to growth of 4 percent from a year ago.

Despite the tepid projection, Steelcase President and CEO Jim Hackett cast an upbeat tone to analysts at the end of Steelcase’s conference call. Hackett noted that Steelcase projected slower sales in the third quarter because of “very strong” growth a year ago. He said that changes in work styles are driving opportunity as employers redesign their offices to create more collaborative spaces.

“So we’re kind of going into 2013 with a great attitude and, as you can see, some momentum and a spirit of hard work and a reality that we can get better,” Hackett said.

Read 1360 times Last modified on Sunday, 06 January 2013 00:30
Mark Sanchez

Senior Writer

msanchez@mibiz.com

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