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Knoll Inc. posts a 61% plunge in second-quarter profit as the office-furniture maker's sales tumble

Thursday 16 July 2009

The sector is reeling as unemployment mounts and businesses trim spending. In May, Knoll slashed its quarterly dividend 83% and has taken other cost-cutting steps.

Chief Financial Officer Barry McCabe said Thursday those efforts helped reduce bank debt in the quarter by about $23 million. \"Maintaining a strong balance sheet and aggressively freeing up working capital remains a top priority,\" McCabe said. As of June 30, the company\'s debt stood at $338.3 million.

Knoll, known for its distinctively designed furniture, reported earnings of $8.1 million, or 18 cents a share, down from $20.9 million, or 44 cents, a year earlier. Excluding restructuring costs, earnings fell to 21 cents from 49 cents.

Sales fell 31% to $202.2 million.

Analysts surveyed by Thomson Reuters were expecting earnings, excluding items, of 21 cents a share on revenue of $202 million.

Gross margin rose to 35% from 34.6%, reflecting favorable currency rates and lower transportation costs as well as cost-cutting. But overhead costs fell just 20%, resulting in an earnings drop that outpaced the revenue decline.

The company\'s order backlog fell 30%.

Three weeks ago, rival Steelcase Inc. (SCS) posted break-even results for its latest quarter on an insurance-related gain and said it would cut more jobs. But Chief Executive James P. Hackett said the downturn may have bottomed out as the industry moves into \"stronger seasonal quarters.\"

Knoll shares closed Wednesday at $8.39 and were inactive premarket. The stock is down 38% in the past year.

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