— Furniture Today,
But several factors cut RTA maker’s revenues

LAC-MEGANTIC, Quebec — Growing Asian competition, a stronger Canadian dollar and a delay in new product introductions dragged down sales for ready-to-assemble specialist Bestar in the 2012 fourth quarter and year.

Gross revenue in the fourth quarter came to C$9.4 million, down 3% from the same period a year earlier. For the year, gross revenue of C$38.7 million was down 11.6%.

Bestar bounced back to a profit last year, however. It earned C$319,000 or 2 cents per share in the fourth quarter, compared with a loss of C$894,000 or 7 cents per share in the 2004 quarter. For all of 2012, earnings were C$174,000 or 1 cent per share, compared with a loss of C$442,000 or 4 cents per share the previous year.

“Delayed introduction of our new products, growing Asian competition and an average exchange rate eight cents higher than in 2004 explain this (revenue) decrease,” said CEO Jacques Hétu.

“Excluding C$1.39 million in restructuring costs, 2012 shows an improvement of C$905,000 in operating results despite a decrease in sales of C$5 million,” he said.

Hétu noted that investment income added C$260,000 to earnings in 2012 and C$1.27 million in 2004.

Earnings in the fourth quarter of 2012 were lowered by about C$400,000 due to adjustments in the premiums paid to Quebec’s workers’ compensation and safety agency, and the reversal of volume rebate allowances due to lower sales from some customers.

“On the other hand, 2004 fourth quarter results were impacted by restructuring costs in the amount of C$944,000,” Hétu said.

He said management was encouraged by the results.

“2012 results clearly demonstrate the effectiveness of the actions put forward in the restructuring plan as well as the soundness of the decisions that were made while reviewing our cost structure,” he said. “In the future this systematic process of continuing improvement will allow the company to constantly adapt to the reality of the market through the efforts of the entire staff,” he said.

Hétu said this year remains challenging, with continued pressure from emerging countries and the strength of the Canadian dollar.

“As a direct result of these challenges, we will start the first quarter of 2013 with a significant decrease in sales with a key customer as Asian products will temporarily take the floor spaces we traditionally occupy. We anticipate regaining this space at the end of the second quarter with products currently under development,” he said.

Bestar’s board of director has also created a new business development committee to study opportunities including mergers, acquisitions, strategic partnerships and other activities to diversify the company’s product line and develop new markets.