Company Profiles for Armstrong Flooring
Armstrong flooring is facing some of the most difficult times the flooring industry has had to face in decades. Macroeconomic forecasts indicate declines in North American commercial markets by 15 percent while declines in European markets are anticipated to be approximately 10 percent. Armstrong and many of its competitors are likely to be hard hit with North American commercial floor markets expected to decline 12 percent to 15 percent. This of course comes on the heels of the real estate boom and the subsequent bust that resulted from the ‘perfect storm’ that was created. At Armstrong, in response to the significant market declines, the management team has initiated cost reductions in an attempt to partially offset volume declines and inflation. In terms of labor, Armstrong reduced its global workforce by 10 percent since 2006. The company plans to reduce another 5 percent to 10 percent in 2009. In light of the current economic climate, Armstrong is expecting its sales will decline at least 15 percent in 2009. Creditors will be interested to learn that Armstrong’s free cash flow for the year is also anticipated to be at least 50 percent below what it was in 2008. To start off the 2009 year, Armstrong’s earnings are down, which the company partly attributes to seasonal fluctuations. Nevertheless, the company is expecting a modest operating loss in the first quarter of 2009. In evaluating the 2008 year as a whole, Armstrong’s net sales were $3,393.0 million compared to $3,549.7 million in 2007. On the bright side, Armstrong was able to offset some of the declines in volume by slightly raising prices and by offering a line of products that consumers viewed more favorably.
