Fedders Reports Increased Q1 Sales, Declined Profit
May 10, 2006
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HVAC manufacturer Fedders Corporation announced net sales for the first quarter of 2006 increased 36.8 percent to U.S. $99.7 million compared to $72.9 million in the prior-year quarter.
Net sales within the HVAC/R segment increased 40 percent due to higher sales of room air-conditioners in North America. Sales also increased for dehumidifiers, residential ducted air-conditioners and commercial air-conditioners. Sales in the Engineered Products segment increased 2.3 percent.
Fedders reported that despite increased sales, gross profit for the quarter declined to $12.7 million, compared with $13.6 million in the prior-year quarter, and decreased to 12.7-percent of net sales during the period versus 18.7 percent in the prior-year period.
Fedders said profit declined as a result of increased copper, aluminum, and plastic costs of $4.2 million that could not be passed along as price increases to customers with fixed-price contracts for room air-conditioners and dehumidifiers. Also impacting gross profit in 2006 was a significantly higher sales mix of lower-margin room air-conditioners. According to Fedders, the lower-margin sales were partly offset by increased sales of higher-margin residential ducted and commercial air-conditioners.
The net loss applicable to common stockholders in the first quarter was $9.9 million, or $0.32 per diluted common share, compared to $9.1 million, or $0.30 per diluted common share in the prior-year period.
"Sharp increases in commodity costs, especially copper, masked operational improvements from plant consolidations and reduced…expenses," Fedders' Chairman and CEO, Sal Giordano, Jr. said. "An additional plant consolidation…and passing through higher commodity costs in the form of price increases should have a positive effect going forward."
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