Dorel working to turn around RTA segment
Ameriwood planning to launch new products
Michael J. Knell -- Furniture Today, June 29, 2006
MONTREAL — Although its home furnishings segment has been a drag on performance in recent years, consumer goods giant Dorel Inds. intends to remain a force in ready-to-assemble furniture.
Speaking at the annual shareholders meeting here, President and CEO Martin Schwartz said Dorel’s RTA strategy embraces aggressive product development and a blend of domestic and offshore manufacturing to ensure long-term profitability and growth.
He told shareholders that all company operations — including home furnishings, juvenile and recreation/leisure segments — are running smoothly and contributing to profitability.
“There have been … some challenges over the past year,” Schwartz said. “RTA in particular has needed and received considerable attention. We have been disappointed with our returns in this segment for some time and are working aggressively to turn things around.”
He said Dorel’s major RTA brand, Ameriwood, has a plan in place to launch new products and seek out new customers, and that results already are evident.
“The combination of domestic and offshore production is working well,” Schwartz said. “Availability and the cost of particleboard have pressured margins, however, customer price increases are being implemented and will take effect through the year.
“Dorel has been in the RTA furniture business for over 25 years, and traditionally we have done well, even when some of our competitors have not. The industry is now in transition, which I believe will result in significant change. I am confident that Dorel will emerge as a thriving industry force,” he added.
Dorel’s other home furnishings businesses performed well in 2005 and are off to a good start this year, Schwartz said. That includes import division Dorel Asia and Cosco Home & Office. The former has had four-year growth of 79% in revenues and 66% in operating earnings, he said, while the latter has repositioned its furniture business and expects to provide greater revenue and margin growth. Futons also continue to be a strong performer, he said.
In 2005, Dorel had total revenues of $1.8 billion, up 3% over the prior year. Net earnings fell 8.7% to $91.3 million. The home furnishings segment had sales of $569.3 million, up 4.8% over 2004, with much of that gain due to Dorel Asia.
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Dorel working to turn around RTA segment
Jul 9, 2006
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