Steelcase Loss Narrows, Hiring Spurs Demand
Jun 23, 2004
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Office furniture maker Steelcase Inc. posted a narrower quarterly loss as increased hiring by U.S. companies spurred greater demand for office furniture and a weak dollar offset rising steel costs.

However, in a conference call following the results, company executives warned that discounts and dealer incentives remain high due to intense competition and that major European markets, particularly France and Germany, remain weak.

Steelcase reported a net loss of U.S. $5.7 million, or $0.04 a share, for the first quarter ended May 28, compared with a loss of $13.4 million, or $0.09 a share, a year earlier. The 2005 first-quarter loss included $3.6 million in net restructuring charges.

The results were better than both the company's own forecast -- for a loss of $0.09 a share to $0.14 a share, after accounting for higher steel costs and restructuring charges -- and analysts' average estimate of a loss of $0.07 a share, according to Reuters Estimates. Revenue rose 7.6 percent to $597.7 million, helped by sales from dealers recently added to the company's books.

"Strong job growth during the past quarter should bode well for our business," James Hackett, president and CEO, said in a statement.

Although Steelcase's North America unit implemented a temporary steel surcharge on orders placed after April 25 to cope with higher steel prices, the surcharge did not give revenue a substantial boost, the company said. The unit's steel costs were $2.5 million higher after-tax.

Steelcase, based in Grand Rapids, MI, U.S., said it expects second-quarter results to range from break-even to a loss of $0.05 a share, after restructuring charges.
It forecast quarterly revenue growth at 5 percent to 8 percent. Second-quarter revenue should include $15 million from newly consolidated dealers and an additional $7 million from steel surcharges.

The company neither affirmed nor updated a full-year estimate, saying it would provide a quarterly business forecast. (Reuters)

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