L&P earnings jump 38.6%
By Larry Thomas -- Furniture Today, February 6, 2005
Carthage, Mo. — Leggett & Platt, a major supplier of furniture and bedding components and machinery, said net income surged 38.6% in 2004 on record sales of $5.1 billion, a 15.9% increase over 2003. Same-location sales last year were up almost 12%.
Fourth-quarter sales jumped 12.4% to $1.3 billion from $1.1 billion a year ago. Same-location sales rose 11%, as net profits grew 11.2% to $65.6 million.
Chairman and CEO Felix Wright said, "2004 was a very good year. We generated almost $350 million in cash from operations, reduced net debt and again increased dividends."
The strongest gains came from business units that make upholstered furniture mechanisms, carpet underlayment and machinery, he said.
Sales from Leggett's residential furnishings segment, which include furniture and bedding components, were up 13.2% to $2.5 billion for the year, with an 11% increase in same-location sales.
That segment's earnings before interest and taxes jumped 27% to $265 million.
During a conference call with securities analysts, President and Chief Operating Officer David Haffner said unit sales gains were especially noteworthy in upholstered furniture mechanisms, with Leggett benefiting "from an industry trend to incorporate high-quality motion features into more upholstered products."
Haffner said worldwide bedding demand was essentially flat in 2004, despite a strong first half. Demand moderated in the third quarter and declined in the fourth quarter, he said.
2004's second half was marked by reduced promotional spending by bedding manufacturers, which led to less promotion by retailers, Haffner said. But he noted that most mattress makers implemented price increases during the second half, so they should be able to put more money into promotions in 2005.
Wright told analysts that raw materials costs, especially steel, appear to have stabilized. However, the price of steel nearly doubled in 2004, and the company spent about $200 million more for steel last year than it did in 2003.
He said Leggett has been "reasonably successful" in passing on price increases to cover higher raw materials costs.
Last year's net income of $285.4 million amounted to $1.45 per fully diluted share. Wright told analysts the company is forecasting 2005 earnings of $1.50 to $1.70 per share on sales growth of 6% to 10%.
| Leggett & Platt | |||
|---|---|---|---|
| Owns Fashion Bed Group (Berkshire, Dresher and J/B Ross), Harris-Hub, Duro-Metal, Bedline and L&P Consumer Products Division | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/31 | 2004 | 2003 | Change |
| Sales | $1,282,200,000 | $1,141,200,000 | 12.4% |
| Operating income | 93,700,000 | 102,500,000 | (8.6%) |
| Net income | 65,600,000 | 59,000,000 | 11.2% |
| Earnings per share | 0.33 | 0.30 | 10.0% |
| Year ended 12/31 | 2004 | 2003 | Change |
| Sales | $5,085,500,000 | $4,388,200,000 | 15.9% |
| Operating income | 455,600,000 | 361,800,000 | 25.9% |
| Net income | 285,400,000 | 205,900,000 | 38.6% |
| Earnings per share | 1.45 | 1.05 | 38.1% |
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