Canadian Press
SHERBROOKE, Que. (CP) – Furniture maker Shermag Inc. (TSX: SMG) has cut its second-quarter loss to $1.1 million, from a year-ago $2.1 million, as cost-cutting offset lower revenue.


The loss for the quarter ended Sept. 29 amounted to nine cents a diluted share, compared with 16 cents per share a year earlier, the Sherbrooke-based company reported Monday.

On analyst polled by Thomson Financial had forecast a loss of 23 cents per share, before one-time items.

Net revenue declined to $42.5 million from $48.1 million.

“The consistent focus on our business transformation plan is beginning to yield results as we have begun to see some progress in our efficiencies,” CEO Jeff Casselman said in a release.

“We have also been successful in further increasing the level of imported products. These gains, however, continued to be offset in part by additional changes in the U.S.-Canadian dollar exchange rate..

A nine per cent depreciation in the U.S. dollar reduced sales revenue by $3.3 million during the quarter.

“The company has experienced the loss to bankruptcy of several customers, the most important being Storehouse Inc., during the first half of the year,” Shermag said. “Management believes this reflects general market conditions which continue to be difficult and highly competitive.”

At the same time, the benefits of the company’s transformation process are starting to bear fruit,” Casselman said. “Our plan to focus our domestic facilities on “choice based products” is gaining traction and efficiency, and the plan to increase imports of non-choice items is also progressing well.’

It is expected that more than 35 per cent of Shermag’s products will be made outside Canada this year.

Shermag employs more than 1,500 people and is a manufacturer and importer with its own cutting rights, sawmill, veneer plant, manufacturing operations and global supply division.