Diversity pays off for RTA specialist Bestar
By Michael J. Knell -- Furniture Today, March 9, 2008
Lac-Megantic, Quebec — Diversifying into the components business is paying off for ready-to-assemble specialist Bestar, which reported that its sales were up 6.4% in the fourth quarter and 30.4% for the full year.
Net income in the quarter declined by more than half to C$50,000 or 0.4 cents per share, from C$127,000 or 1 cent per share in the 2006 fourth quarter. For the year, the company earned C$250,000 or 2 cents per share, a turnaround from a net loss of C$967,000 or 7 cents per share in 2006.
Sales were C$10.4 million in the 2007 quarter and C$43.3 million for the year.
"Development of the component market and significant sales growth in ready-to-assemble furniture led to an important increase in sales in 2007," CEO Paulin Tardiff said in a written statement.
However, the company continued to cope with the higher cost of raw materials, resulting from a fire at one of Bestar's key suppliers in early 2006. Insurance payments of C$500,000 and C$499,000 in the fourth quarters of 2006 and 2007, respectively, offset the effect.
Like other Canadian manufacturers, Bestar also has been hurt by the rise in the value of the country's currency against the U.S. dollar. It estimates that the surging dollar cost it C$1.5 million in sales last year, although that was tempered by a C$536,000 increase in the fair value of its forward exchange contracts.
"Despite the difficult environment, our 2007 sales increase confirms the success of our strategy of diversifying and consolidating our position in our traditional market. Nevertheless, the results are also evidence that we must boost our competitiveness, particularly in the context of a stronger Canadian dollar," said Tardif. "It is therefore clear that despite all our work to implement action plans in other areas, the company's future, even in the short term, depends on equipment modernization."
Late last week, Bestar announced it was investing C$3.5 million in new equipment to increase production capacity and operational flexibility while reducing costs.
"The equipment modernization project, slated for completion at the second quarter of 2008, will enable us to meet our current customers' expectations in both the office furniture and component markets in an efficient and cost-effective manner," Tardiff said.
He said the investment also will allow Bestar to gain footholds in segments such as kitchen cabinets and storage furniture.
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Diversity pays off for RTA specialist Bestar
Mar 9, 2008 -
Sales keep rising for RTA specialist Bestar
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