Richelieu Hardware increases sales 18 per cent; profit falls to $10M

MONTREAL – Richelieu Hardware Ltd. (TSX:RCH) credits recent acquisitions for the biggest increase in consolidated sales in a decade, even as quarterly profits narrowed by $1.5 million.

“The second quarter yielded strong sales growth, thanks notably to the acquisitions of the last 12 months,” said Richard Lord, president and CEO of the Montreal-based importer, manufacturer and distributor of specialty hardware and related products.

“I particularly want to point to the 7.8 per cent internal growth of U.S. dollar sales in the United States, which resulted from our market penetration efforts at a time when the U.S. economy has not yet shown the expected signs of a recovery,” Lord said in a statement accompanying the company’s second-quarter earnings.

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Richelieu said net earnings were $10 million or 48 cents per share in the three months ended May 31, compared with $11.5 million or 53 cents per share in the same 2010 quarter.

Consolidated sales totalled $139.2 million, up 18 per cent from $118 million in the 2010 period.

Lord said he was satisfied with profit margins despite the decline in net earnings from 2010.

“It should be noted that the corresponding quarter of 2010 had benefited from exceptional conditions and some of our recent acquisitions currently yield lower margins than Richelieu due to their different product mix,” he added.

On March 14, Richelieu closed its third acquisition of the year – Provincial Woodproducts Ltd, a distributor with a dominant position in Newfoundland, which allowed the company to extend its physical presence to cover the Canadian market as a whole.

“The integration of these new operations is going well and efficiently, focused on operational profitability and the creation of sales synergies,” Lord said.

Richelieu targets a customer base of kitchen and bathroom cabinet, furniture, and window and door manufacturers, plus the residential and commercial woodworking industry, as well as a large customer base of hardware retailers, including renovation superstores.