Leggett & Platt Lowers Outlook
St. Louis, MO, June 19--Lower sales, continued high energy costs and a weaker U.S. dollar are just some of the reasons that Leggett & Platt Inc. (LEG) lowered its second-quarter and full-year forecasts, Chairman and Chief Executive Felix Wright said.
Speaking during a conference call Wednesday, Wright also pointed to delays in passing along higher raw material prices and sales mix as other reasons why the manufacturer of furniture components lowered its outlooks.
The Carthage, MO company said after the market closed Tuesday that it expects to earn between 22 cents and 25 cents a share in the second quarter. That compares with the company's previous guidance of between 27 cents and 32 cents a share. Sales are also expected to be lower than the company previously thought.
Leggett & Platt also lowered its full-year earnings ands sales forecasts. The company now expects to earn between $1.05 and $1.20 a share, down from its previous guidance of $1.15 to $1.30 a share. Sales guidance is now negative 2% to positive 2%, down from Leggett & Platt's previous forecast of flat to up 4%.
Through the first 10 weeks of the second quarter, Leggett & Platt's same location sales were down 7%. By segment those sales were down 6% in residential furnishings, down 10% in commercial fixtures and components, down 9% in aluminum products and down 17% in industrial materials.
However, sales were up 3% in specialized products.
High energy costs are hurting second-quarter results more than Leggett & Platt previously expected, Chief Executive Wright said during the conference call. Although those costs aren't as high in the second quarter as they were in the first quarter, they're still above the company's original expectations, he said.
High energy costs affect all of Leggett & Platt's businesses, but they affect its residential, industrial and commercial segments the most, Wright said.
Other factors affecting results include asset utilization at Leggett & Platt's spring producing facilities being reduced even more than previously thanks to weak market demand and inventory maintenance, Wright said. Also, soft grill demand by consumers has led to reduced utilization in the company's aluminum segment, he said.
Lower sales are hurting second-quarter earnings by about 1 cent a share and energy costs are reducing earnings by the same amount, Wright said. The remainder of the difference between Leggett's prior forecasts and its current guidance comes from the other factors, he said.
Looking into the second half of the year, Wright said any improvement in the unemployment level and in consumer confidence "should help drive consumer spending of big ticket items" and that would help many of Leggett & Platt's businesses, he said.
However, continued high energy prices in the second half would hurt consumer spending because consumers will spend more money on gas and electricity, Wright said. Leggett & Platt needs to see not only consumers opening their wallets wider, but for businesses to do the same, he said.
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