Bestar 4Q profit plunges 65.3%
By Michael J. Knell -- Furniture Today, March 19, 2007
Lac-Megantic, Quebec — Ready-to-assemble producer Bestar is optimistic about 2007, even though it posted lower earnings in the fourth quarter of last year.
A 4.5% sales increase from the same quarter a year earlier, to C$9.8 million, wasn't enough to overcome the high value of the Canadian dollar and a softening at retail. Earnings of C$128,000 were down 65.3% from a year ago.
For the full year, sales fell 13.9% to C$33.3 million and the company lost C$967,000, compared with earnings of C$389,000 in 2005.
Bestar CEO Paulin Tardif said the rise in the value of the Canadian dollar in the past year had a negative impact of C$1 million on both sales and earnings. He said results also suffered because of "a substantial slow-down in sales at one of our major clients (and) procurement problems after a fire at our primary supplier of raw materials, which led to significant additional costs and sales delays."
Bestar also had investment income of C$260,000 in 2005, and recovered C$500,000 in insurance claims in 2006. The recovery covered only part of the costs incurred after the fire, Tardif said.
He maintained that 2006 was a turning point for Bestar, and said management remains optimistic.
"We successfully launched our new business strategy, which puts new emphasis on component manufacturing," he said. "This effort has allowed us to add new customers, including some with considerable sales potential.
"Moreover, this line of business is expected to grow significantly during 2007. And in our traditional market, the recent introduction of a new collection at one of our major clients has already produced interesting results," he said.
He added that Bestar continues to make investments this year, purchasing equipment that will increase capacity and flexibility and hiring nearly 50 employees to meet growing demand.
The company also has received an extension until April from Toronto Stock Exchange to meet its listing requirements. The TSX told Bestar last year its market value was too low.
