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Dorel expects acquisition to raise earnings this year

By Furniture Today Staff -- Furniture Today, January 18, 2004

MONTREAL — Dorel Inds., Canada's largest furniture manufacturer, said its earnings will climb this year, partly because of the pending acquisition of U.S. bicycle maker Pacific Cycle.

Dorel, parent of ready-to-assemble furniture brands Ameriwood, Ridgewood and Carina, projects 2004 earnings of US$3.25 to $3.35 per share, up from the $2.30 to $2.40 per share it expects to report for 2003.

Dorel agreed last week to buy Pacific Cycle, maker of Schwinn, Mongoose and GT bicycles, in a $310 million deal expected to close in early February. The acquisition is expected to add $335 million to $375 million in sales and should be accretive to earnings, Dorel said.

RTA revenues are expected to grow this year, helped by the recent acquisition of Carina Furniture, although higher board prices could hurt profits. Martin Schwartz, Dorel's president and chief executive officer, said board prices have gone up 5% to 10% in the past several months.

"With recent capacity reductions in the board industry, prices are expected to continue to rise into the foreseeable future. This puts a squeeze on our margins, but we are hopeful that we will be able to counteract some of these pressures during the second half of the year," he said.

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