Pergo’s Annual Sales Down

Trelleborg, Sweden, Feb. 10--Pergo AB had sales of 3.194 billion SEK for the year, a decrease of 11% from 3.729 billion SEK the year before, excluding currency effects. The decline was primarily due to lower price levels in North America and, to some extent, reduced sales volumes in Europe. The volume decline in Europe was due mostly the discontinuation of low price products to IKEA. Excluding currency effects, sales for the fourth quarter declined 21%, compared with the same period a year ago.The decline was due mainly to lower prices for Home Depot, lower volumes to specialty dealers in the U.S. and the discontinuation of lower priced goods to IKEA. Sales to other customers in Europe were lower than a year earlier. The gross profit margin for the full year was 21.6%, a 4.1% improvement from the previous year. Operating profit was 61 million SEK, compared to an 889 million SEK loss a year ago. During the preceding year, restructuring costs and other nonrecurring expenses of 644 million SEK were charged against the operating loss. This year’s profit is to a large extent an effect of the action program. Operating profit for the fourth quarter was 33 million SEK, compared to a 701 million SEK loss in the same period a year ago. Sales in North America were 1.989 billion SEK, an 8% decline from 2.304 billion SEK the year before. Sales during the fourth quarter were 449 million SEK, a decline of 21% from 605 million SEK in the same period a year ago. Sales volumes to Home Depot exceeded last year’s but could not offset lower prices and lower volumes to the specialty retail segment. The total flooring market experienced low growth during the year. Hard flooring in particular grew faster than the total market. Competition in laminate flooring was intense, leading to declining prices, particularly in the low and mid range segments. Sales volumes to Home depot were higher in the fourth quarter than in the third quarter, and overall volumes increased during the year, compared to the year before. Despite higher flooring volumes, sales declined, primarily due to lower prices. During the third quarter a new product range was introduced for specialty retailers. Reception of the new products exceeded expectations, with the result that some delivery delays arose toward the end of the year. In addition, a new product with preglued joints was introduced in the fourth quarter. Preparations for the launch of Pergo at Lowe’s continued throughout the autumn. Deliveries of Pergo products to Lowe’s began in late January 2003, with the initial 550 store stocking estimated to be completed by the end of the first quarter.