MAY 14 I STEINWAY I FINANCIAL
Solid Q1 Results
Steinway Musical Instruments has announced that its revenue and gross profit for the first quarter have remained in line with the first quarter of 2007.
Band sales decreased 3 percent, but an increase in professional instruments sales offset lower shipments of student horns and percussion instruments. The resulting higher mix of professional instrument sales led to improved gross margins for the quarter, from 20.2 percent to 21.6 percent. Despite $400,000 in costs due to the Kenosha plant closing in 2007, an increase in unit production at the Elkhart brass plant had a positive impact on margins for the quarter.
Worldwide piano sales for the first quarter increased 3 percent over the prior year period. Overseas markets remained strong. Shipments of mid-priced pianos are up 43 percent and shipments of Steinway grand pianos are also up 3 percent. Economic conditions have had a negative impact on domestic shipments of Steinway grand pianos, leading to a 13-percent worldwide decline in Steinway grand unit shipments. However, worldwide, unit shipments of mid-priced pianos have increased 18 percent. This higher mix of mid-priced pianos has led to a decrease in gross margins from 36 percent to 34.5 percent.
“We are satisfied with our overall results this quarter,” said Steinway CEO Dana Messina. “Positive results at our overseas piano business offset soft consumer demand in the United States. We continue to experience solid markets overseas and, unfortunately, a weak market here at home. Based on our expectation for a slow domestic consumer market, we will be reducing production in the second quarter. We also expect reduced margins from our Asian operations as the strong euro is making our German pianos more expensive to purchase.”