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Rising Steel Costs Again Pinch Leggett & Platt Profits

Leggett & Platt (NYSE: LEG) said third-quarter sales rose 6.4%, but the increase was more than offset by rising steel costs, which sent profits down 11.7% to $82.6 million or 60 cents per share.

The furniture and bedding components supplier said sales were especially strong in its automotive and adjustable bed businesses.

Companywide sales totaled $1.009 billion, up from $948.9 million in last year’s third quarter. Unit volume was up 4% from the same quarter last year.

Karl Glassman, president and CEO, said the company is implementing selective price increases to offset rising steel costs, and said margins should begin to improve early next year, assuming steel costs remain stable.

"We are pleased to have delivered strong third quarter sales, with growth coming from several businesses including Automotive and Adjustable Bed,” Glassman said. “As expected, earnings and margins were pressured in the quarter by higher steel costs and the timing lag we typically experience in passing along those increases.”

The company’s residential products segment, which includes bedding components, fabric converting and carpet cushioning, had sales of $431.2 million in the third quarter, an increase of 5.9% from the same quarter last year.

The furniture products segment, which includes furniture components, adjustable beds and finished furniture, had a sales increase of 8.2% to $287.7 million.

For the first nine months of 2017, companywide sales totaled $2.96 billion, up 4% from $2.85 billion in the first nine months of 2016.

Nine-month net income totaled $256.3 million or $1.86 per share. That was down from $304.2 million or $2.17 per share in the comparable period.

Leggett & Platt also tweaked its sales and earnings guidance for the year. It is now projecting sales of $3.95 billion to $4 billion, compared with a July projection of $3.9 billion to $4 billion.

Full-year earnings from continuing operations are projected at $2.49 to $2.54 per share. That’s up from a September projection of $2.40 to $2.50 per share.



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