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Sunday, 17 February 2013 22:00

Haworth ‘quite optimistic’ for 2013 after 5-percent drop in sales last year

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HOLLAND — Haworth Inc. had what President and CEO Franco Bianchi considers a “pretty good year” in 2012 given the economy and despite a small decline in sales tied to the sale of two brands.

The year began with lower sales volumes but finished “actually very strong,” enabling Haworth to enter 2013 with momentum, Bianchi said.

That’s a general pattern the overall office furniture industry followed in 2012, as North American shipments declined for the year by 1.1 percent but rallied in the final three months to post an increase for the fourth quarter.

“In the beginning of the year, we started lower than we expected and we ended up pretty strong. It should speak well for 2013. I’m actually quite optimistic about what I see,” Bianchi said. “It’s not going to be phenomenal, but I think we are going to have a stronger year.”

The Holland-based office furniture company recorded 2012 global sales of $1.31 billion, a 5-percent decline from $1.38 billion in 2011. Haworth attributed the decline to the sale of partner companies Groupe Lacasse in Canada and Castelli in Italy.

Haworth did not disclose the combined revenues generated by Groupe Lacasse and Castelli. A January story by an online woodworking trade publication listed Castelli’s 2011 revenues at $36.2 million, citing the Italian buyer, matures AG.

In its annual sales announcement, Haworth said it was “encouraged” by growth in Asia and Latin America in 2012 and that the company continued to grow globally.

Across the industry in North America, shipments dipped to $9.27 billion in 2012 from $9.37 billion in 2011, according to the Grand Rapids-based Business and Institutional Furniture Manufacturers Association. Many companies reported lower sales to the federal government.

The industry started out 2012 with relatively flat first quarter shipments, followed by declines of 2.7 percent in the second quarter and 4.0 percent in the third, according to BIFMA data. Shipments rebounded to grow by 2.3 percent in the fourth quarter over the same period a year earlier, although that wasn’t enough to offset the two quarterly declines.

BIFMA, in its most recent outlook issued in early September, projected growth in North American shipments during 2013 of 3.4 percent to $9.6 billion.

“I like to think that what is going for us is a more stable and moderately positive economy as a whole,” Bianchi said.

Bianchi notes, however, that some uncertainty remains for the U.S. economy and Europe “is not out of the woods yet.”

The family-owned Haworth does not publicly report earnings and announced its 2012 sales just after other top players in the office furniture industry reported their latest quarterly results.

Iowa-based HNI Corp. this month reported sales of $422.3 million for its furniture segment in the fourth quarter, a 5.0-percent increase from the same period a year earlier. About half of the increase came from acquisitions made during the year, the company said.

Full-year sales for HNI’s furniture segment totaled $1.68 billion for 2012, 10.4-percent higher than 2011. Acquisitions accounted for $93.0 million of the company’s annual sales growth. During the year, the company saw sales to the federal government decline by 27 percent.

HNI expects sales in the first quarter to decline 2 percent to 7 percent from a year earlier.

“We expect growth in the first quarter of 2013 to be challenging, given continued economic uncertainty related to this ongoing debt ceiling and government spending concerns,” Chairman, President and CEO Steve Askren told brokerage analysts in a conference call. “We do anticipate business spending will improve as the year progresses and we anticipate low-single-digit growth for the full year.”

East Greenville, Penn.-based Knoll Inc., which has facilities in Grand Rapids and Muskegon, had a strong quarter, growing sales in its furniture division by 12 percent in the final three months of the year to $181.1 million. The quarterly increase is in contrast to full-year furniture sales of $633.3 million for 2012, down from $664.1 million in 2011.

Jasper, Ind.-based Kimball International Inc. reported a sharp 12-percent decline in sales in the furniture segment for the second quarter of its 2013 fiscal year to $130.9 billion. The company attributed the result to a double-digit decline in sales to the federal government and two “unusually large” hospitality projects that shipped in the same quarter a year ago, inflating sales for that period.

Amid the sales reports, the latest quarterly activity index from Michael A. Dunlap & Associates “indicates that the industry is on solid ground and on a positive track.”

The index, based on surveys with executives on 10 key indicators, registered an overall score of 54.30 as of January, down slightly from the 54.68 three months earlier and virtually even to the average index recorded since the quarterly survey began in 2004.

“The industry remains on a very steady, albeit flat, trend line. Given current economic conditions, I think this is good news,” said Michael Dunlap. “I maintain the opinion that the industry will continue on its slow growth period into early 2013, then see a modest acceleration during mid to late 2013.”

The personal outlook index among executives of furniture makers and suppliers who responded to the quarterly survey increased to 55.20 in January from 54.52 in October.
Come next month, Steelcase Inc. and Herman Miller Inc. both report results for their latest sales and earnings.

Brokerage analysts expect Grand Rapids-based Steelcase to report quarterly sales of $709.4 million, a 2.7-percent increase from a year ago, and net income of 19 cents per share, according to an average estimate.

Analysts expect Zeeland-based Herman Miller to report quarterly sales of $439.3 million, a 10-percent increase from the same period a year earlier, and net income of 29 cents per share.


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