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Steelcase 1st quarter loss higher than expected; share price falls

Wednesday 24 March 2010

Office furniture maker Steelcase Inc posted a surprise quarterly loss, partly due to restructuring expenses, and forecast a first-quarter loss higher than market expectations, leading its shares to fall as much as 12 percent.
The company forecast a first-quarter loss of 5 cents to 9 cents a share, on revenue of $520 million to $540 million.
Analysts were expecting a loss of 1 cent a share, on revenue of $566.3 million, according to Thomson Reuters.
Steelcase, along with peers such as Knoll Inc and Herman Miller, has been hit by weak demand, high office vacancies and corporate downsizing, resulting from the weak economy.
According to the latest industry data provided by Business and Institutional Furniture Manufacturers Association (BIFMA), shipments and orders of office furniture in the United States will decline 3.8 percent and 1.5 percent, respectively, in 2010.
However, the company on a conference call with analysts said orders have continued to strengthen through the first three weeks of March and believes that modest growth is possible in fiscal 2011.
The company added that its forecast does not include any potential impact from the U.S. healthcare reform legislation that was recently approved.
If the legislation is passed as proposed during the first quarter, the company maybe be required to record additional deferred tax expense during the period, Steelcase said in a statement.
FOURTH-QUARTER RESULTS
The company posted fourth-quarter loss of $13.6 million, or 10 cents a share, compared with a loss of $65.7 million, or 49 cents a share, a year earlier.
The company posted adjusted loss of 5 cents a share, compared with analysts\' expectations of breakeven, according to Thomson Reuters I/B/E/S.
The latest quarter included a restructuring cost of $9.9 million.
Revenue fell about 16 percent to $551.9 million, lagging behind analysts\' expectations of $571.7 million.
Shares of the company were down 10 percent at $6.50 Tuesday afternoon on the New York Stock Exchange. They touched a low of $6.35 earlier in the session.

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