Dorel Sales Up, Earnings Down in 2005

March 1, 2006  by in UnCategorized   

By Home Furnishings Business in on March 2006 A sharp decline in fourth-quarter sales in its recreational and leisure business helped reduce earnings at Canadian ready-to-assemble major Dorel Industries Inc., the company said Thursday.

Net income for the quarter was $22.5 million (U.S. dollars), compared to $34.7 million in the prior-year period, on revenue of $430.3 million, down from $469.1 million in the fourth quarter of 2004. Excluding restructuring costs incurred on the previously-announced Ameriwood ready-to-assemble furniture plant shutdown, net income would have been $22.9 million.

Year-end revenue of $1.76 billion was up 3 percent from 2004's $1.71 billion. Adjusted net income for 2005 declined 2.6 percent to $97.5 million from $100.1 million the prior year. On an unadjusted basis, annual net income was down 8.7 percent to $91.3 million.

The fourth-quarter revenue drop was due to a sharp decline in Dorel's recreational and leisure segment, which declined by 35.8 percent against the same period in 2004, which included exceptional sales of the Sting-Ray bicycle in anticipation of the 2004 holiday shopping season. The juvenile and home furnishing segments, however, posted modest revenue increases of 1.5 percent and 2 percent respectively in the quarter.

Year-over-year increases in revenues also occurred in both the juvenile and home furnishing segments, which increased by 9.1 percent and 4.8 percent, respectively. An 11.5 percent drop in recreational and leisure sales, again due to the Sting-Ray's success in 2004, offset those gains.

"In 2005, Dorel had strong performances in juvenile and in several home furnishing units," said Martin Schwartz, president and chief executive officer of Dorel. "However these were offset by challenges in recreational/leisure and ready-to-assemble furniture. Pacific Cycle was following a huge success in 2004 with its Sting-Ray chopper bicycle, a success that made 2005 a difficult one by comparison. However, as a result of this event, we have re-focused our energy on improving the recreational product line beyond bicycles into motor scooters, swing sets and adding effort to other areas of that business. Our RTA furniture business continues to be in a turn-around phase. Significant improvements were made in sales and marketing, as well as new product development, but necessary factory improvements remain to be achieved."