Dorel reports best ever year-end results despite challenging fourth quarter
Montreal, Quebec - 3/11/2009
Dorel Industries Inc. (TSX: DII.B DII.A) today announced results for the fourth quarter and year ended December 30, 2008. Revenue for the fourth quarter increased 4.6% to US$479.9 million from US$458.9 million a year ago. Organic revenue growth was approximately 10%. Net income decreased 14.2% to US$19.2 million, or US$0.57 per diluted share, from US$22.3 million, or US$0.67 per diluted share a year ago. Excluding restructuring costs, net income in 2007 was US$24.0 million, or US$0.72 per diluted share.
Revenue for the year rose 20.3% to US$2.2 billion versus last year’s US$1.8 billion. Organic revenue growth for the year was 6% and was on track to be higher had it not been for the slowdown in the fourth quarter. Net income grew 29% to US$112.9 million or US$3.38 per diluted share from US$87.5 million or US$2.63 per diluted share. Excluding restructuring costs in 2007, net income for that year was US$100.1 million or US$3.01 per diluted share. Pre-tax earnings were US$19.6 million compared to US$28.6 million for the quarter and US$132.0 million compared to US$106.6 for the year.
“Dorel’s 2008 performance is the best ever achieved despite challenges which intensified as the year progressed. Rapidly rising commodity prices were a major factor for a good part of the year, affecting the majority of the Company’s operating divisions. We were successful in passing some of these higher input costs on to retailers without significantly weakening consumer demand of Dorel products at store level. Despite the deepening global economic crisis through the second half of the year, Dorel’s products continued to demonstrate that they are in demand even in times when retail sales as a whole decline,” commented Dorel CEO and President, Martin Schwartz.
“However, despite the demand for Dorel’s products at retail, our inventories rose to record levels during the fourth quarter as retailers reacted to the economic crisis by significantly cutting back on orders to suppliers, almost across the board, to reduce their in-stock level. The vast majority of our inventories are non-seasonal, nor fashion oriented so we view this as a temporary situation and we have already seen these inventory levels reduce in the first two months of 2009. Unfortunately, the retailers’ actions had the impact of reducing our sales, earnings and cash flow for the year. Dorel’s point-of-sale (POS) levels remained firm through the quarter. Juvenile and Home Furnishings sales declines to retailers far exceeded demand at the consumer level. As an example, sales at Dorel Home Products fell in the quarter by 51% versus 2007 despite retail sales remaining steady compared to the prior year. The Recreational/Leisure segment was able to grow sales organically in this environment, but they were still lower than our expectations,”continued Mr. Schwartz.