FBI 4Q profits drop 23.2%
By Jay McIntosh -- Furniture Today, January 30, 2006
St. Louis — Weak sales at Broyhill and raw materials price increases led to a 23.2% decline in net income in the fourth quarter for Furniture Brands International, the company reported.
Sales were down 1.4% from a year earlier to $593.5 million, and earnings came to $17.1 million.
For the year, sales dipped 2.5% to $2.4 billion and earnings fell 32.9% to $61.4 million.
"We continue to see a difference in revenue across our brands," said Chairman and CEO Mickey Holliman. "Weakness at Broyhill was partially offset by a revenue increase at Thomasville, and revenues were essentially flat at Lane and HDM," which includes Henredon, Drexel Heritage and Maitland-Smith.
Denise Ramos, chief financial officer, said that in the fourth quarter, sales were up in the mid-single digits from a year earlier at Thomasville and flat at Lane and HDM, while Broyhill posted a double-digit decline.
Holliman said the company was able to offset the sales weakness and raw materials cost hikes by "selected price increases" and cost-savings programs. He added that Broyhill's fourth-quarter sales dip was an improvement from earlier in the year, and he expects that trend to continue this year.
While company officials didn't make any predictions, they indicated Furniture Brands may almost be done closing plants after several years of shifting much of its case goods production offshore. In the fourth quarter, domestic plant capacity utilization topped 90%.
Holliman said he believed prices were now stable in case goods, after a period of deflation with the transition to cheaper Asian-sourced product, but said there is "some momentum regarding sourced goods in the area of upholstery."
Case goods plant closures continued to eat into Furniture Brands' profits, with restructuring, asset impairment and severance charges of $1 million after taxes in the fourth quarter, and a net $13.9 million for the year. In 2004, the company had a net $1.5 million charge in the fourth quarter and $5.9 million for the year.
Holliman said he expects "steady improvement" this year. He said the company continues to generate strong cash flows from operations, and repurchased 4.1 million of its shares last year at an average cost of $20.04.
"Our senior management is focused on building our brands through aggressive marketing, product development and consumer research," he said. "The consolidations of back-office and manufacturing operations of our high-end brands is on plan; and our logistics and supply chain, procurement, and related development processes are being streamlined across all our brands."
He said orders were up in the first three weeks of this year, and the company expects a sales increase in the low single digits in the first quarter. Earnings are projected at 43 cents to 47 cents per share, compared with 46 cents in the comparable quarter last year, Holliman said.
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FBI 4Q profits drop 23.2%
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