JASPER, IN — Kimball International Inc. recorded a 7% gain in net sales of its furniture products for fiscal 2012 Q3, despite a 10% overall net sales decline in the quarter for the corporation, compared to 2011.

According to a statement from Kimball, much of the decline can be attributed to the expiration of a Bayer AG contract in the Electronic Manufacturing Services segment. Excluding the loss of those sales, consolidated net sales for the quarter would have risen 6%.

Net sales for the furniture segment in the quarter rose to $123.5 million, compared to $115.5 million in 2011, due to increased sales of its hospitality furniture. However, the company reported gross profit declined 1.5 percentage points due to excess operating capacity at some plant locations, a shift in sales mix, higher transportation and increased supply costs. Selling and administrative costs also rose 5% for fiscal 2012 Q3 compared to 2011.

Offsetting this, “third quarter earnings in this segment benefitted from recent price increases, lower discounting and the recovery of previously paid import duties related to a retroactive change in the tariff rate,” the company said in a statement.

Despite the gain in net sales compared to fiscal 2011, the company experienced a decline of $25.3 million when compared to its second quarter figures. In a statement, Kimball CEO and President James Thyen noted that seasonal slowdown in the office furniture industry affected sales for the quarter. “While leading order activities such as customer visits and project quotes remain strong, we believe our fourth quarter will continue to be challenging in this segment.”