Investing.com -- Shares in SCS, rose considerably in after-hours trading after the world's largest office furniture manufacturing company saw its earnings surge by more than 6.5% over its last quarter.
During Steelcase's second quarter which ended in late-August, the Grand Rapids, Michigan-based company, earned revenue of $819 million, as its U.S. domestic division offset fledgling sales in Europe. On a currency-neutral basis, when the negative impact of foreign exchange translation was discounted, Steelcase said its revenue spiked by 7% on a year-over-year basis.
In the U.S. only, Steelcase said its cost of sales as a percentage of revenue improved by 190 basis points during the three-month period. The cost reductions, Steelcase said, were driven primarily by improvements in negotiated pricing, lower material, freight and distribution costs. As a result, earnings for Steelcase on the quarter increased to $37.2 million or 0.30 per share, up from $30.5 million or 0.24 during the same quarter last year.
"Our adjusted operating margin reached a new 15 year high and was led by the Americas, which posted a margin of 15 percent in the second quarter," Steelcase president and CEO Jim Keane said in a statement. "This was a remarkable quarter for the Americas, as the full benefits of the long-term investments we made in the past to optimize our footprint combined with great performance by our people in sales, marketing and operations to deliver more value for our customers and capture more value for our shareholders."
For the second half of the year, Steelcase expects to suffer a marked increase in operating losses relating to an unexpected rise in restructuring costs among its divisions in Europe, Middle East and Africa.
"The manufacturing and distribution issues which arose this quarter related to inconsistent equipment reliability, power outages and a failed sprinkler system at our new facility in the Czech Republic and resulted in significant incremental costs and labor inefficiencies," Steelcase CFO Dave Sylvester said in a statement. "As of today, manufacturing is back on schedule and our distribution platforms have stabilized, but we expect additional costs in the third quarter as we assist our dealers in working through the backlog in their deliveries and installations caused by these issues."
In its current quarter, Steelcase expects to earn revenues of $800 to $820 million on per share earnings of 0.31 to 0.35.
Shares in Steelcase jumped 0.70 or 3.83% in after-hours trading to 19.00.