Dorel is satisfied with the start of 2009
Montreal, Quebec - 5/27/2009
Dorel Industries Inc. (TSX: DII.B, DII.A) President and CEO, Martin Schwartz, told shareholders attending today’s annual meeting that there are a number of important factors which will see the Company perform well, in light of the current global recession. Dorel posted its best year ever in 2008 with revenues of US$2.2 billion and net income of US$113 million. First quarter 2009 revenues were US$525 million and net income was US$28 million, lower than last year’s first quarter, but “given the context of the economic situation, we are more than satisfied with the start to the year,” Mr. Schwartz told his audience.
Dorel’s products have traditionally been resilient in recessionary times. Despite current and past difficult economic times, consumers have continued to purchase juvenile items and Dorel’s diverse product line matches their needs well. The bicycle/fitness industry as a whole has been benefitting from recent attitudes towards the environment and personal health. In addition, Dorel has always operated in the value priced home furnishings market. As shoppers look toward less expensive furniture purchases, they are increasingly turning to the Company’s ready-to-assemble furniture products.
“Our price points fit the times. Retailers have shifted gears and are offering consumers products in what we term “opening to mid price points”, as shoppers of every description are gravitating to the big box outlets. Dorel excels in these categories with the majority of our sales in these price points. We are also picking up new listings from competitors. In times of uncertainty, retailers seek strong, stable suppliers with a history of delivering, and who will be around for the long term. Dorel fits that bill perfectly. Our financial strength also provides a high level of comfort,” said Mr. Schwartz.
Shareholders were provided with an overview of all three Dorel segments. Results at Dorel Juvenile Group in the US have been strong in 2009. Their earnings exceeded plan in the first quarter and order levels in the second quarter have been strong. The division will be making a major announcement early in the near future which will unveil a completely revolutionary advancement in one of Dorel’s most important juvenile categories.
Juvenile in Europe softer, but strong base remains
Currently, the situation in Europe is different. The economy abroad slowed later than in North America and, as such, recovery will lag the US. “We are, nonetheless, optimistic. Ever since we acquired the juvenile business in Europe in 2003, it has done very well for us. Over the years we have built upon a very solid base, expanding operations into many European countries and building market share with our excellent products and strong management teams there.”
A focus on bicycle innovation
Much has been accomplished since Dorel acquired Cannondale last year. A new, multi-faceted Worldwide Centers of Excellence program has been developed, in the continuation of Dorel’s strategy to become the global innovation leader in the recreation and leisure markets. Five Centers of Excellence are being established around the world, with each focused on market leadership in a specific market segment or expertise. The Recreational/Leisure segment plans on unveiling new Cannondale models in the coming months with truly unique features. “We’ve been working with an industry-leading designer with the goal of making Cannondale the desired brand in bikes,” noted Mr. Schwartz.
Home Furnishings continues to make headway
Excellent progress has been made by the management team dedicated to Home Furnishings. This year’s first quarter was the segment’s best since the fourth quarter of 2007, with Ameriwood’s domestically-produced RTA furniture leading the way. The demand for Ameriwood’s lines at mass merchants and DIY centers is a testament to their efforts to concentrate on “back to basics” items, rebuilding customer confidence and improving efficiencies.
The expertise that turned around Ameriwood is now being centered on Cosco Home & Office. Operations and product offerings are more focused and they have won several new important, large listings. While the division still expects to lose money in 2009 due to the cost of resolving previous years’ issues , plans are well on track for a return to profitability next year.
“The positive results of our efforts are apparent in the first quarter 2009 results. We are optimistic in Juvenile in North America and have a number of innovative new, exciting products in the pipeline. The situation in bikes remains unpredictable as consumer buying patterns have been inconsistent. In Home Furnishings, indications point to a good year, led by Ameriwood which is now a solid money maker. Even after considering all of the issues in 2009, our full year outlook remains unchanged. We are committed to reducing expenses, anticipate cash flow of at least US$150 million and expect input costs will remain stable through the year. As previously stated, we do not anticipate 2009 will be as profitable as 2008 but nor do we expect it to be anywhere nearly as negative as current market conditions suggest,” concluded Mr. Schwartz.
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 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$2.2 billion company with 4700 employees, facilities in eighteen countries, and sales worldwide.
Caution Concerning Forward-Looking Statements
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of Dorel Industries Inc. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. The business of the Company and these forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ from expected results. Important factors which could cause such differences may include, without excluding other considerations, increases in raw material costs, particularly for key input factors such as particle board and resins; increases in ocean freight container costs; failure of new products to meet demand expectations; changes to the Company’s effective income tax rate as a result of changes in the anticipated geographic mix of revenues; the impact of price pressures exerted by competitors, and settlements for product liability cases which exceed the Company’s insurance coverage limits. A description of the above mentioned items and certain additional risk factors are discussed in the Company’s Annual MD&A and Annual Information Form, filed with the securities regulatory authorities. The risk factors outlined in the previously mentioned documents are specifically incorporated herein by reference. The Company’s business, financial condition, or operating results could be materially adversely affected if any of these risks and uncertainties were to materialize. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.