On September 23, the office furniture giant HNI disclosed its latest operating status. HNI' s orders have grown considerably, and it has also brought a lot of backlogs. However, problems such as labor shortages and supply chain issues have caused unexpected restrictions on production capacity, and have a negative impact on revenue growth and profit levels.

HNI revealed that as of September 17, its office furniture orders increased by 29% year-on-year, and the order backlog increased by 99%; compared with the same period in 19 years, the number of orders was basically the same, and the backlog increased by 83%. Thanks to the strong growth of commercial customers and small and medium-sized customers, the product category has returned to the level before the epidemic in 19 years.

The company' s other major product sector, orders for civil building materials products increased by more than 40%, and the backlog increased by 168%; the order volume increased by 57% compared with the same period in 2019, and the order backlog was three times that of the period. The demand for orders for new construction and renovation projects continues to remain strong, making the sales performance of this sector also not to be underestimated.

Labor shortages and supply chain issues are causing greater capacity constraints than expected. As a result, the company now expects sales growth in the third quarter to be revised down to 16% to 18%. The company had previously expected sales in the third quarter to increase by about 20% year-on-year.

In the past half of the third quarter, the company has seen more difficulties, including more congested ports and an increase in the number of COVID-19 diagnoses in its factories. These new difficulties further limit the growth and recovery of production capacity.

The company expects that these problems will not be completely resolved within this year, and has taken active actions to deal with it, including building a new production facility in Mexico and strengthening the procurement of key components.

The strong order growth coupled with capacity constraints has resulted in a backlog that is much higher than the levels of the previous year and 2019. The company expects that in the remaining months of this year, the backlog of orders will remain high and bring strong revenue growth to 2022.

Based on past experience, the office furniture department' s revenue rose to a peak in the third quarter, and then declined in the first quarter. In view of the current level of backlog, HNI expects that in 2022, the office furniture division's revenue will be the least affected by the season, and revenue will record strong growth in the first half of the year.