SEGMENT RESULTS - Second Quarter 2005 (versus 2Q 2004) Residential Furnishings - Total sales increased $18 million, or 3 percent, with acquisitions (net of divestitures) contributing $3 million of the increase. Inflation alone enhanced revenue by over 3 percent, but that incremental revenue generated only modest income.
Unit sales decreased about 2 percent, with increased unit sales of mechanisms (for upholstered furniture) more than offset by declines in other areas, including U.S. innerspring unit sales. EBIT (earnings before interest and income taxes) was $48.2 million, a decrease of $22.9 million, or 32 percent.
The EBIT decrease was attributable to absence of last year's FIFO benefit, changes in product mix, reduced unit sales, and higher chemical costs (which impact foam operations).
Commercial Fixturing and Components - Total sales increased $16 million, or 6 percent, with acquisitions contributing $3 million of the increase. Same location sales increased 5 percent, with unit volumes contributing 2 percent of the growth. EBIT declined by $2.5 million, or 14 percent, with gains from higher sales and cost savings more than offset by unfavorable product mix, higher resin costs (which impact the plastics operations), the impact of currency, and other items.
For the full year, the company expects approximately a 100 basis point improvement in the Commercial segment EBIT margin. This improvement is smaller than previously anticipated, reflecting year-to-date results, changing product mix, and higher than anticipated commodity, plant closure, and new operation start up costs.
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