Denmark's DLH to divest U.S. subsidiary Inter-Continental Hardwoods, records business as discontinued operation in Q1; CEO says focus is on strengthening European business, global sales
June 8, 2012
– Danish tropical timber and panel supplier Dalhoff Larsen & Horneman (DLH) is planning to divest its American subsidiary Inter-Continental Hardwoods, according to the company's interim report for the January to March quarter, which was published in May.
In a note included in the report outlining discontinued operations and assets held for sale, DLH says it took the decision in March to sell its American warehouse-based business Inter-Continental Hardwoods Inc.
As a result of the decision, and the transfer of Russia to DLH's Central European region, the group is now organized into four business areas, the report said. Three of the business areas, in the Nordic area, Western Europe and Central Europe & Russia, focus on servicing industry, DIY center and retail customers from the group's warehouses. The fourth business area, Global Sales, trades globally in hardwood and sheet materials.
DLH is also in the process of relocating its administrative functions to Hong Kong, a move that is expected to reduce overhead costs in the second half of 2012.
CEO Kent Arentoft commented that DLH experienced a continuation of market conditions in the first quarter that had impacted the construction sector and the company's main markets since Q3 last year. This meant it had not been possible to maintain the same profitability as in Q1, 2011. "We continue to reduce our costs and the decision to sell
the American hardwood operation means that we can devote all our efforts to strengthening our European business and Global Sales,’ he said.
Results for the American business were recorded under discontinued operations in the Q1 report. Sales were 37 million Danish Kroner (DKK), down 14% from DKK43 million last year, while EBIT dropped to DKK1 million from DKK30 million. The company noted that Q1 was characterized by a number of non-recurring costs as a result of organizational changes and the winding up of a small business area within the American hardwood sector .
DLH reported a total Q1 net loss of DKK10 million compared with a loss of DK 4 million a year earlier. Net sales were DKK657 million, down from DKK715 million in Q1, 2011.
The primary source of this article is a Q1 interim report issued in May, 2012 by Dalhoff Larsen & Horneman, Taastrup, Denmark.