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Sunday, 13 September 2015 20:27

Office furniture industry posts second quarter growth; BIFMA tempers 2016 outlook

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GRAND RAPIDS — While the office furniture industry continued to post strong shipment growth during the second quarter of 2015, industry forecasts show signs of the sector plateauing by the end of the year.

Shipments from April to June grew to $2.55 billion, an increase of 5.4 percent over the same period a year ago, according to updated data from the Grand Rapids-based Business and Institutional Furniture Manufacturers Association (BIFMA).

During the first quarter of 2015, shipments reached $2.35 billion, putting the industry on track to potentially outpace the recently updated end-of-the-year forecast of $10.2 billion, which would be an increase of 4 percent from last year’s results.

“Things would have to slow down dramatically in the second half to finish out at 4 percent,” said Tom Reardon, executive director of BIFMA.

The updated BIFMA outlook prepared by IHS Global Insight also tempered projections for 2016 shipments to $10.4 billion, a 2.3-percent increase compared to the previous 7.9-percent increase forecasted earlier in the year. In a previous quarterly outlook, BIFMA projected shipments to reach $11 billion in 2016.

An influx of imports from foreign office furniture manufacturers is driving the lowered projection for next year, Reardon said. IHS data show the share of imports stands at 25 percent, an increase of 5 percent from 2009 and up 21 percent since 1989.

While the IHS model predicts the slowdown, some analysts doubt that industry activity will fall off in the second half of the year as rapidly as the models suggest, Reardon said.

However, Reardon notes that order growth among office furniture manufacturers has slowed from 9.4 percent in the first quarter of 2015 to 3.5 percent in the second quarter, according to IHS.

Data show revenue for West Michigan’s office furniture manufacturers either growing or remaining relatively flat.

Analysts forecast that Zeeland-based Herman Miller Inc. (NASDAQ: MLHR) will end its present 2016 fiscal year at $2.25 billion, compared to the $2.14 billion it posted at the end of its 2015 fiscal year, according to a consensus estimate

Meanwhile, analysts expect Grand Rapids-based Steelcase Inc. (NYSE: SCS) to end its current 2016 year at $3.08 billion, in line with the company’s $3.10 billion revenue in the prior fiscal year.

Both companies will report their latest quarterly earnings in late September.

Read 3388 times Last modified on Monday, 28 September 2015 10:59

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