Dorel 4Q income slips 3.9% despite sales gain
By Michael J. Knell -- Furniture Today, March 18, 2007
Montreal — Despite declines in sales and earnings in its home furnishings segment, Dorel Inds. solidified its position as Canada's largest producer and distributor of household furniture in 2006.
For the fourth quarter, the consumer goods giant had revenues of $447.9 million, up 4.1% from 2005, thanks to the continuing strong performance of its juvenile products segment.
Net income in the quarter fell 3.9% to $21.7 million, a decline attributed mainly to higher-than-expected antidumping duties imposed by the U.S. Department of Commerce on product Dorel imported into the United States from China.
For all of 2006, revenue edged up 0.6% to $1.77 billion, and earnings of $88.9 million were down 2.7% from the previous year. Earnings were hurt by restructuring costs, related to manufacturing facilities in Canada, the United States, Italy and France.
Dorel reports in U.S. dollars.
Revenue for the home furnishings segment was $145.3 million in the fourth quarter, down 2.4% from a year earlier, although adjusted earning from operations grew 9% to $8.9 million.
The home furnishings segment includes ready-to-assemble specialist Ameriwood, Cosco Home & Office, Carina, Ridgewood, SystemBuild, Dorel Home Products and Dorel Asia, the company's import arm.
Revenue in the segment for the year fell 4.8% to $541.9 million. Adjusted earnings from operations were off 3.9% to $31.9 million.
The fourth quarter of 2006 includes a charge of $4.5 million for U.S. antidumping duties, pertaining to metal furniture Dorel imported from China into the United States that was subject to duties from December 2001 through May 2003. Dorel originally estimated it owed $2.5 million, but learned the U.S. had assessed the product at a higher rate and needed an additional $4.5 million.
In response, Dorel said it is suing its law firm for "failure to timely file a request for an administrative review by the DOC of the duties imposed."
The company also said that revenue increases by Cosco and Dorel Asia were offset by a 15% drop in ready-to-assemble furniture sales by Ameriwood. Meanwhile, futon sales were relatively flat when compared to 2005.
However, Ameriwood's adjusted earnings rose $1.9 million, because of measures to streamline operations, cut raw material costs and realign sales efforts.
He said that this year in the RTA segment, Dorel expects "high single digit revenue growth ... with a continuing turnaround in earnings."
Schwartz also announced that for the first time, Dorel will pay a stock dividend of 12.5 cents to shareholders, beginning this quarter.
| Dorel Inds. | |||
|---|---|---|---|
| Owns Ameriwood, Charleswood, Cosco and Ridgewood | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/30 | 2006 | 2005 | Change |
| (a) Includes licensing and commission income of $5.2 million in the 2006 quarter, $4.2 million in the 2005 quarter, $23.1 million in the 2006 year and $20.2 million in the 2005 year. (b) Includes pretax restructuring costs of $3.7 million in the 2006 quarter and year, $550,000 in the 2005 quarter, and $7 million in the 2005 year. |
|||
| Revenues (a) | $447,930,000 | $430,258,000 | 4.1% |
| Operating income | 44,093,000 | 46,534,000 | (5.2%) |
| Net income (b) | 21,675,000 | 22,546,000 | (3.9%) |
| Earnings per share | 0.66 | 0.69 | (4.3%) |
| Year ended 12/30 | 2006 | 2005 | Change |
| Revenues (a) | $1,771,168,000 | $1,760,865,000 | 0.6% |
| Operating income | 178,982,000 | 193,489,000 | (7.5%) |
| Net income (b) | 88,865,000 | 91,322,000 | (2.7%) |
| Earnings per share | 2.70 | 2.77 | (2.5%) |
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