Leggett & Platt changes business strategy

Carthage-based Fortune 500 company Leggett & Platt is forsaking its traditional emphasis on increasing revenue and finding other ways to bring in profit, including divesting itself of numerous divisions and facilities, according to Thomson Financial:

Revenue growth, which Leggett said it has 'long held as a primary goal,' will now be seen as just one way to boost shareholder returns. Annual sales are expected to fall by about $1.2 billion as the company sheds less-profitable businesses.

Leggett plans to sell its aluminum products division and six other business units next year. The unit sales should lower revenue by about $900 million annually, and generate a gain of $400 million after taxes, Leggett said.

In addition, the store fixtures segment will shed its least profitable business, resulting in a loss of about $100 million, or 20 percent, of its sales. Leggett also expects to close certain unprofitable facilities at what it says are otherwise healthy business units, resulting in an additional $200 million in lost revenue.

To accomplish the change, Leggett expects to take 'significant restructuring-related charges' that could reach as high as $300 million.

Specific details about the effect of the new strategy on fourth quarter earnings will be provided 'once the amounts become more certain,' the company said, adding that it plans to issue 2008 guidance in its Jan. 24 earnings statement, and will update guidance quarterly after that. The company said it will no longer issue quarterly earnings guidance.