Leggett & Platt profit falls 5 pct on weak sales
Friday, October 28, 2011
CARTHAGE, Mo. (AP) — Specialty product maker Leggett & Platt Inc. said Thursday its third-quarter profits fell a worse-than-expected 5 percent on disappointing sales and pricing pressure from competitors.
The maker of diverse products including bed parts and store fixtures fell short of analysts' estimates and also lowered its guidance for full-year earnings. Its shares fell in after-hours trading.
Net earnings for the July-through-September period were $45.3 million, down from $47.4 million a year earlier. Per-share earnings from continuing operations were 31 cents, unchanged from the third quarter of 2010.
Revenue climbed 9 percent to $940.9 million from $866.5 million a year earlier. But the company said inflation and currency exchange fluctuation accounted for most of the growth, and unit sales were flat.
Analysts polled by FactSet were expecting earnings of 36 cents per share on revenue of $927.2 million.
CEO David Haffner said the company was not satisfied with the results. He said profit margins fell because of three factors: competitive pricing pressure in some product categories, customers switching to lower-cost products, and the company's decision to slow production in order to reduce inventory. Curtailing production, he said, had the side effect of making overhead less cost-efficient.
Leggett & Platt, which is based in Carthage, Mo., lowered its full-year earnings estimate to a range of $1.15 to $1.20 per share, down from a range of $1.25 to $1.40 per share. It cited reduced expectations for the economy, competitive moves to sustain production volumes and customers' switch to lower-cost items.
The company increased its quarterly dividend by 1 cent to 28 cents a share in the third quarter, its 40th consecutive annual dividend increase.
Shares in Leggett & Platt sank $1.37, or 5.8 percent, to $22.20 in extended-hours trading after dipping 35 cents, or 1.5 percent, to $23.57 during the regular session.