Dorel sees modest gains in first half
But home furnishings sales drop 10.1%
By Furniture Today Staff -- Furniture Today, August 3, 2007
MONTREAL – While total sales climbed moderately for consumer goods giant Dorel Inds. in both the second quarter and the first half of the year, its home furnishings segment continued to under-perform as weakness at retail caused several customers to reduce their order levels.
Total revenue for the period ending June 30 was $459 million, up 5.3% from the $435.9 million recorded for the second quarter last year. Net income fell 39.5% to $10.8 million or 32 cents per diluted share, compared to last year’s $17.9 million or 55 cents per diluted shares.
Dorel reports its results in U.S. dollars.
Included in those results are restructuring costs incurred by both Dorel Europe and by Ameriwood, the company’s RTA furniture division.
Revenue for the six months also ending June totalled $914.7 million, a 3.1% gain from the $886.9 million a year ago. Net income was $38.8 million or $1.17 per share, a 7.9% decline from the $42.1 million or $1.28 per share, including restructuring costs.
Martin Schwartz, president and CEO, attributed the sales gains primarily to juvenile specialist Dorel Europe and Pacific Cycle.
“While we are pleased with those results, we are disappointed in the earnings at our home furnishings segment,” he told analysts. “Each of the divisions within this segment has challenges that they are dealing with.”
The recent closing of ready-to-assemble furniture producer Ameriwood’s plant in Dowagiac, Mich., will result in total restructuring costs of $11.5 million, $9.7 million of which was incurred as a pre-tax charge in the second quarter.
During the second quarter, the home furnishings segment saw its revenue drop 12% to $105.6 million although adjusted earnings from operations increased 16.8% to $5.7 million. Year-to-date revenues were $228.2 million, down 10.1% from last year’s $253.8 million.
“A number of the divisions within the segment were adversely affected as two major customers attempted to lower their on-hand quantities of furniture inventory,” the company said in a statement. “Ameriwood and Dorel Asia were the most affected by these customers reducing their order levels in the quarter.”
Dorel told analysts that while it expects overall growth to be modest for the year, earnings improvement, excluding restructuring costs, will outpace revenue increases. But it anticipates the home furnishings segment will continue to lose ground.
“Due to the furniture inventory reduction initiatives at some major customers, revenue in the home furnishings segment is now forecast to be less than 2006 levels,” Schwartz said.
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Dorel 2Q sales up 5.3%, but furniture still slumping
Aug 12, 2007
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