Teknion Corp. reported lower second-quarter profit Wednesday despite posting a 20 per cent increase in sales over the same period last year.

The Toronto-based designer, manufacturer and marketer of office furniture said it had net earnings of $234,000 for the three months ended May 31, down from $1.4 million in 2004.

Sales rose by $25.2 million to $151.5 million, with the United States accounting for $78.9 million, Canada contributing $60.1 million and international markets $12.6 million.

The results translated into earnings of zero cents per share, compared with two cents a share in the second quarter of 2004.

The company said it incurred costs of $1.4 million during the quarter associated with exiting from two facilities and moving operations into existing premises. It also took a charge of $1 million in the first quarter relating to the moves.

The charges helped push Teknion to a loss of $6 million for the first six months of 2005, despite boosting sales by $46.7 million to $287.4 million.

"I am pleased with the year-to-date increase in sales of 19 per cent and sales for the quarter that reached a level not seen in 14 quarters," CEO David Feldberg said in a release. "Market activity continues to be strong and therefore we expect our third quarter to continue to show significant growth over the prior year with sales in line with those reported in the first quarter of this year," he said.

Teknion (TSX:TKN.SV) said it is encouraged by statistics that show growing customer demand since early 2004.

"Most industry observers agree that a recovery is underway as a result of modest improvement in unemployment, new office construction and a decline in the office vacancy rate," it said.

Shares of Teknion closed up five cents at $6.65 on the TSX prior to the announcement of its quarterly results.

CBC News