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Despite price increases, Steelcase records quarterly losses of $ 11.4M amid high inflation, fuel costs

Grand Rapids – led to high inflation Steelcase Inc. To record losses in the most recent quarter despite strong double-digit sales growth and multiple price increases.

Grand Rapids-based Steelcase (NYSE: SCS) posted a net loss of $ 11.4 million, or 10 cents per share, on global sales of $ 740.7 million in the first quarter of fiscal 2023, an increase of more than three to 32 percent. – A year ago and beating expectations.

The net loss was lower than expected, with the US productive price index growing at 10.8 per cent in May, and Steelcase contributing to a quarter of revenue growth, despite four price increases. Another price hike – the fifth in 16 months – will come in July.

According to Chief Financial Officer Dave Sylvester, Steelcase is implementing additional tariffs “in response to a rapid increase in petroleum-based products, freight and delivery costs.”

Steel prices lost $ 15 million in inflation over the three months ended May 27, with early price increases. The quarterly results included $ 4 million in restructuring costs in the American segment.

In a conference call this morning with brokerage analysts, President and CEO Sarah Armbruster said it was “tough but necessary work” to implement price increases in response to “exceptional inflation levels” that include “skyrocketing fuel and logistics costs.”

Steelcase expects sales of $ 875 million to $ 900 million in the second quarter, a 20- to 24-percent increase in net income, from 6 cents to 10 cents per share. Steelcase entered the quarter with a $ 927 million order backlog.

“With respect to inflation, we are currently expecting an increase of at least $ 85 million compared to our initial estimates for fiscal year 2023 due to significant changes in steel prices, higher energy costs and faster costs of petroleum-based products and external projections of freight forwarding. And delivery, ”Sylvester said.

Sylvester said the price hike should offset inflation from $ 50 million to “probably” $ 60 million.

The 40-year peak in 2022 is hitting both consumers and businesses.

In its June report of a monthly survey with industrial purchasing managers in Grand Rapids and Kalamazoo, Grand Valley State University “High prices, rapidly rising transportation costs and logistics hurdles are cutting profitability for many firms,” ​​noted economist Brian Long.

Perigo Co. plc It is estimated in May that inflation in 2022 will cost the company $ 125 million. This is an increase from the anticipated high costs of the previous $ 80 million.

Perrigo CEO Murray Kessler said at an investor conference last week – a store-brand, producer of over-the-counter drugs – that Walmart is able to work on price adjustments in existing contracts to cover more with Target and other customers. Will cost.

“They’ve worked with us, they’re understanding, they’re brutally tough, and it’s not always different from what they have with them, but when it comes to the real cost of the contract, they work with us,” Kessler said.

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