Montreal, Canada -- 03/10/2011
Dorel Industries Inc. (TSX: DII.B DII.A) today announced results for the fourth quarter
and year ended December 30, 2010. Revenue for the fourth quarter decreased 1.1% to
US$539.5 million from US$545.3 million a year ago. Net income rose 4.2% to US$25.2million,
or US$0.76 per diluted share, from US$24.2 million, or US$0.73 per diluted share last year.
Revenue for the full year rose 8.1% to US$2.3 billion as compared to US$2.1 billion in 2009.
Net income was up 19.2% to US$127.9 million, or US$3.85 per diluted share from US$107.2
million or US$3.21 per diluted share last year. Excluding the impact of business acquisitions
and year-over-year foreign exchange rate variations, mainly in the Juvenile Segment,
organic sales growth in 2010 exceeded 7%.
"The fourth quarter was difficult, but we are pleased with Dorel's full year performance.
Our divisions effectively managed challenging economic conditions with value-oriented
product offerings, a strong commitment to new product development and strategic brand
support. In an environment of reduced consumer discretionary spending and rising input
costs, Dorel was able to deliver revenue growth of over 8% and improved earnings over
the prior year. If there was ever a test of the acceptance of Dorel's brands and products,
the past two years have provided it. The fact that we have done well through this period
speaks volumes to our strong position in the many global markets in which we operate,"
commented Dorel CEO and President, Martin Schwartz.
"Despite this success, we were not satisfied with the performance of certain of our U.S.
businesses that service mass market customers. Point-of-sale levels at these customers
slowed in the second half and as a result the retailers reacted by not only reducing
replenishment orders, but also by aiming to further cut their own in-store inventory levels.
This left us with a lot of inventory at year end that we had anticipated selling in the fourth
quarter. We also had to contend with higher container freight rates and raw material costs
that impacted earnings. As we enter 2011 we will work through the extra inventory and we
are expecting new products in 2011 to drive improvements in the months ahead."
Net income in 2010 was positively impacted by a lower tax rate as compared to 2009.
A significant reason for the rate decrease was the recognition of incremental tax benefits
of US$9.7 million pertaining to the resolution of several prior years' estimated tax positions.
This non-cash amount, which represents US$0.29 per diluted share, was not recognized
for accounting purposes in prior years and was only recorded in the fourth quarter of 2010
when the relevant tax authorities confirmed the recognition of these benefits.
Fourth Quarter
Recreational/Leisure revenues increased by US$30.2 million or 17.2%. Organic sales were
higher by almost 19% when the impact of varying rates of exchange rates relative to the
U.S. dollar is excluded.
Sales increased in the mass market category by almost 20%, supported by the successful
Schwinn brand marketing campaign initiated earlier in the year and repeated in November
to coincide with the holiday shopping period.
Sales to IBD customers also grew by approximately 20% as successful new model
introductions have been met with enthusiasm in both Europe and North America.
Importantly, the gains are in the majority of the brands sold to IBD customers
and are not limited only to Cannondale.
Earnings improved from last year based on increased sales and higher margins,
but results at the Apparel Footwear Group ("AFG") were disappointing and were a
drag on the segment's earnings. Despite its small size relative to the total segment,
quarter-over-quarter earnings decreased by over US$2 million at AFG. Going into 2011,
renewed focus on this business and earnings improvement initiatives are expected to
help the segment's performance in 2011.
Full year
Revenues were up 13.7% to US$775.0 million, compared to US$681.4 million a year ago.
Organic sales growth was approximately 11%. All divisions contributed to the increase,
with the exception of AFG whose sales were flat.
There were several reasons for the improvement. In North America, the successful
Schwinn advertising campaign increased sales, particularly at mass merchants,
contributing to single digit sales growth.
The advertising spent for this initiative exceeded US$5 million for the year.
Sales to large customers in Canada were up over 25% from the prior year and have
more than doubled since 2008. Cycling Sports Group (CSG) sales to IBD customers
in both the U.S. and Europe increased by over 20% with new product innovation
driving sales of new models introduced in the year. Sell through at retail was strong
and market penetration increased.
Earnings in the segment for the year increased by 31.3%, as many of the positive
elements influencing the fourth quarter were prevalent throughout the year. The
business model put in place soon after the Cannondale / Sugoi acquisition in 2008,
began to pay dividends in 2010. A renewed focus on supporting the segment's many
known brands and a clearer direction on new product development paid dividends in
the form of improved earnings.
For Dorels full earnings report See:
* http://www.newswire.ca/en/releases/arch ... c9643.html
Profile
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile
products and bicycle company. Established in 1962, Dorel creates
style and excitement in equal measure to safety, quality and value.
The Company's lifestyle leadership position is pronounced in both its
Juvenile and Bicycle categories with an array of trend-setting products.
Dorel's powerfully branded products include Safety 1st, Quinny,
Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale,
Schwinn, GT, Mongoose, IronHorse and SUGOI in Recreational/Leisure.
Dorel's Home Furnishings segment markets a wide assortment
of furniture products, both domestically produced and imported.
Dorel is a US$2 billion company with 4500 employees, facilities
in nineteen countries, and sales worldwide.
