Despite a 9 percent gain in third-quarter sales, Leggett & Platt Inc. reported flat quarterly earnings of 31 cents per share.
The Carthage-based manufacturer of engineered components and products for homes, offices and vehicles reported third-quarter sales of $941 million, up $74 million compared to the same period last year.
Officials said the sales growth did not pull up profits because it was primarily tied to inflation and currency rate fluctuation, as well as a change in the company’s steel mill production.
“We are not satisfied with our results this quarter,” CEO David Haffner said in a news release. “Though sales were approximately what we anticipated, unit demand was essentially flat. Gross margin declined, largely due to three factors: competitive pricing pressure in certain product categories; ‘decontenting’ as customers switched to lower-cost and lower-value components; and our intentional effort to reduce inventory levels by curtailing production, which has the side effect of reducing overhead absorption.”
Leggett officials had projected unit demand would pick up this fall.
“That has not happened, and many of the recent forecasts and surveys from well-regarded sources suggest our economy will be facing headwinds for longer than previously expected,” Haffner added. “As a result, we have recently initiated additional efforts to decrease excess production capacity, reduce overhead and trim our cost structures.”
Leggett’s total shareholder return has remained in the top half of the companies in the Standard and Poor’s 500 index. The company’s board of directors increased the quarterly dividend by 1 percent to 28 cents in the third quarter – marking the 40th consecutive annual dividend increase for the company, with a compound annual growth rate of 14 percent.
SBJ staff also contributed to this story.[[In-content Ad]]