Weak retail, strong currency hurt Amisco
By Michael J. Knell -- Furniture Today, October 8, 2006
L'Islet, Quebec — L'Islet, Quebec— Sales and earnings continued to sag for Amisco Inds. in its third quarter as the metal furniture maker battled a strengthening Canadian dollar, a softening retail market at home and in the United States, and unrelenting offshore competition.
In the quarter ended Sept. 2, net sales fell 19.5% to C$9.1 million, and the company posted a net loss of C$106,266 or 3 Canadian cents per share compared to net earnings of C$646,246 or 16 cents per share in the previous year's third quarter.
"The company's sales and profit margins were affected by a decline in the average exchange rate (between the Canadian and U.S. dollars) and Asian competition," said Chairman, President and CEO Réjean Poitras.
Canadian sales slipped from C$3.6 million last year to C$3.1 million in the latest quarter, which Poitras attributed to a reduction in orders from a few large customers.
Meanwhile, sales to U.S. retailers fell 21.7%, from C$7.7 million to C$6 million, due primarily to the weakening U.S. greenback versus the Canadian dollar.
"In fact, in U.S. dollars, sales in that country were down by only $203,000," Poitras pointed out, noting that the U.S. dollar was worth C$1.5521 in the third quarter of 2005, but only C$1.2464 in the 2006 quarter.
In the nine months, Amisco's net sales fell 15.5% to C$27.2 million from C$32.2 million in last year's first three quarters..
Canadian nine-month sales totaled C$9.2 million, down from C$10.7 million last year, and U.S. sales dropped from C$21.5 million to C$18 million.
"All in all, sales decreased by 14.2% in Canada, versus 16.2% south of the border," Poitras said, adding that average exchange rate for the nine-month period fell to 1.2613 in 2006 from 1.5253 last year.
"It should be pointed out that (nine-month) sales in the United States declined by only US$29,041," he added.
During the first nine months, sales to U.S. retailers accounted for 65% of shipments, down from about 75%, the ratio the company had maintained for over a decade before the current currency shift started in late 2003.
Poitras stressed that Amisco's overall financial position remains solid, with total assets of C$21 million at the end of the latest quarter, versus C$23.3 million on Nov. 30, 2005. Amisco's current ratio stood at 2.15:1 and its balance sheet remains debt free, with shareholders' equity totaling C$16 million or $3.92 per share.
| Amisco(a) | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/2 | 2006 | 2005 | Change |
| (a) In Canadian dollars. |
|||
| Sales | C$9,106,000 | C$11,305,000 | (19.5%) |
| Operating income | (185,000) | 827,000 | - |
| Net income | (106,266) | 646,246 | - |
| Earnings per share | (0.03) | 0.16 | - |
| 9 months ended 9/2 | 2006 | 2005 | Change |
| Sales | C$27,199,000 | C$32,197,000 | (15.5%) |
| Operating income | (175,000) | 1,878,000 | - |
| Net income | (162,641) | 1,465,000 | - |
| Earnings per share | (0.04) | 0.36 | - |
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