Dorel to report weak fourth quarter due to Recreational/Leisure softness
First quarter to see substantial rebound in bicycles
TSX: DII.B, DII.A
MONTREAL, Feb. 6, 2014 /PRNewswire/ - Dorel Industries Inc. (TSX: DII.B
DII.A) today stated that 2013 fourth quarter Recreational/Leisure
earnings will be substantially below prior year levels due to top line
weakness and a poorer product mix. As such, the Company's consolidated
results for the quarter and full year will be below 2012.
Sales volumes to Pacific Cycle's mass merchant customers were lower during the fourth quarter than last year as retailers in general experienced fewer consumer visits during the holiday period and curtailed orders. Cycling Sports Group (CSG) sales to the IBD channel were more profoundly affected as dealers were reluctant to increase inventories going into the new year. Industry discounting continued to be a market reality and the number of 2013 model year bicycles sold carrying lower margins was more than anticipated. In addition, supply for firm customer orders for more than US$10 million of CSG 2014 models did not arrive in time for fourth quarter delivery and are being shipped during the current first quarter. Another negative factor during the quarter was unfavourable foreign exchange.
"We had felt that things were improving at the end of the third quarter but the issues outlined above had more of an impact than originally expected. With January completed, normally the quietest month of the year and barring any disasters in weather, Recreational/Leisure earnings for the first quarter should improve by at least 20% to 25% over the corresponding quarter last year. There are now several positive trends working in our favour. Dealer orders are being driven by a firming consumer demand with new models selling at full margins, new SKUs at some of our largest customers, increased licensing revenue, strict cost controls and foreign exchange benefits," said Martin Schwartz, Dorel President and CEO.
"Management at the Recreational/Leisure segment is invigorated and is confident about the year ahead. To be clear, the restructuring and associated charge announced last month was not related to the fourth quarter's poor performance but was undertaken to enhance our competitiveness in the bicycle industry. This will improve profit through 2014 and 2015," concluded Mr. Schwartz.
Dorel will announce year-end results on March 4, 2014.
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile products and bicycle company. 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 global juvenile brands Safety 1st, Quinny, Maxi-Cosi, Bébé Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Recreational/Leisure, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has annual sales of US$2.6 billion and employs 6,300 people in facilities located in twenty-four countries worldwide.
Caution Regarding Forward Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize. Forward-looking statements are provided in this press release for the purpose of giving information about Management's current expectations and plans and allowing investors and others to get a better understanding of Dorel's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channel; foreign currency fluctuations; customer and credit risk including the concentration of revenues with few customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets and subject to dividends being declared by the Board of Directors, there can be no certainty that Dorel's Dividend Policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel's annual MD&A and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously mentioned documents are specifically incorporated herein by reference.
Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on our business, financial condition or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Dorel therefore cannot describe the expected impact in a meaningful way or in the same way Dorel presents known risks affecting the business.
SOURCE Dorel Industries Inc.