GRAND RAPIDS — Universal Forest Products Inc. (UFPI) reached its target for first quarter earnings. The company announced last week that it had net earnings of $5 million for the recently completed quarter, which translates to 25 cents per share.
UFPI had targeted per-share earnings for the quarter at 23 cents to 25 cents.
Still, company executives weren’t thrilled with the results.
“Although our earnings were in line with our target for the quarter, they could have been better,” said William G. Currie, Universal’s CEO, in a release.
“Extremely difficult weather over much of the country negatively impacted sales and overall earnings for the quarter. Weakness in both lumber prices and the manufactured housing market continued to affect our performance, but were anticipated in our forecast,” he added.
Universal’s net sales for the quarter were $284.6 million, from $15 million to $30 million below expectations. The company had hoped for a net-sales figure between $300 million to $315 million.
“While there has been a dramatic up-trend in the lumber market for the last several weeks, lumber prices for the first quarter averaged 25 percent below the first quarter of 2000. Significant unit sales increases in three of the markets that Universal serves were not enough to offset the effect of lower lumber prices during the quarter,” explained Curie.
Currie said Universal has redirected its sales efforts from the manufactured housing industry, which continues to be affected by excess inventories, increased repossession and tight credit conditions. The company is now concentrating more of its attention on its three other markets, which includes the do-it-yourself retail market.
“The result of these efforts is demonstrated by an increase in unit sales,” he said.
Earlier last week, Universal announced a semi-annual dividend of 4 cents per share, payable on June 15 to shareholders of record as of June 1. UFPI has paid an annual cash dividend since 1983 and a semi-annual dividend since 1990. The company has increased its dividend in each of the past six years.
Despite the difficult market conditions facing the firm, UFPI Chairman Peter F. Secchia said the company remains confident that it will reach its Performance 2002 goals.
“As a result, we are returning a modest percentage of our earnings to our shareholders as a dividend, while retaining a majority of our earnings to pursue our growth objectives,” said Secchia.
The five goals Universal has for its five-year Performance 2002 program are:
- To reach $2 billion in annual sales.
- To be the leader in four markets.
- To get a 50-percent revenue increase from its value-added products.
- To get 50 percent growth in net margin.
- To get a return on capital that consistently exceeds the cost of capital.
Prior to last week’s announcements, Fortune magazine placed Universal on its list of the top 1000 companies, a first for the firm. The magazine ranked the company at 921 on the prestigious list. Fortune also rated the firm as sixth in return on investment, sixth on return on assets and seventh in shareholders total return in the forest products and paper category.
Based in Grand Rapids, UPFI manufactures, markets and distributes value-added lumber products.