Dorel: Home still key segment
By Michael J. Knell -- Furniture Today, November 4, 2007
Montreal — Home furnishings no longer drive sales and earnings for consumer products giant Dorel Inds., but management pledged continued support for the segment during a conference call with analysts on third-quarter results.
While home furnishings, particularly ready-to-assemble furniture, has been a struggle, the company has had significant gains in the juvenile and recreational/leisure segments.
In 2003, home furnishings represented 42% of company revenues and 51% of earnings from operations. For 2007 to date, the respective figures are 26% and 13%, said President and CEO Martin Schwartz.
But he said recent initiatives aimed at cost containment and capacity adjustment are beginning to produce results in home furnishings, including the Ameriwood RTA operations.
"Ameriwood is feeling the positive impact of running two plants instead of three," he said, adding that Dorel expects to roll out a home furnishings program in Australia in 2008.
"We are not giving up on home furnishings," Schwartz said. "We are turning the corner in terms of operations and we are bringing new initiatives to retailers. It will grow more slowly than our other businesses. But it is a major profit center and we will do what is needed to beef up home furnishings."
Total third-quarter revenues came to $440.1 million, up slightly from $436.3 million in last year's comparable quarter. Net income was $26.4 million, compared with $25.1 million a year ago. The figures include costs linked to restructurings at Dorel Europe and Ameriwood. Dorel reports in U.S. dollars.
Third-quarter revenues in home furnishings — Ameriwood, Dorel Asia and Cosco Home & Office — dropped 14.5% to $122.1 million, and adjusted earnings from operations plunged 28.3% to $9.3 million. Year-to-date revenues in the segment decreased 11.7% to $350.3 million, and adjusted earnings from operations sagged 24.1% to $17.5 million.
Despite the U.S. housing slowdown, all home furnishing divisions posted higher sales in the third quarter than the second. Other than Dorel Asia, which saw a moderate decline, all home furnishings divisions also had better earnings in the third quarter than the second.
| Dorel Inds. | |||
|---|---|---|---|
| Owns Ameriwood, Dorel Asia and Cosco Home & Office | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/30 | 2007 | 2006 | Change |
| (a) Includes licensing and commission income of $5.5 million in the 2007 quarter, $5.3 million in the 2006 quarter, $17 million in the 2007 nine months and $17.9 million in the 2006 nine months. (b) Includes pretax restructuring costs of $875,000 in the 2007 third quarter and $12.8 million in the 2007 nine months. |
|||
| Revenues (a) | $440,115,000 | $436,300,000 | 0.9% |
| Operating income | 49,626,000 | 49,742,000 | (0.2%) |
| Net income (b) | 26,360,000 | 25,073,000 | 5.1% |
| Earnings per share | 0.79 | 0.76 | 3.9% |
| 9 months ended 9/30 | 2007 | 2006 | Change |
| Revenues (a) | $1,354,819,000 | $1,323,238,000 | 2.4% |
| Operating income | 144,874,000 | 134,889,000 | 7.4% |
| Net income (b) | 65,144,000 | 67,190,000 | (3.0%) |
| Earnings per share | 1.96 | 2.04 | (3.9%) |
-
Dorel 3Q revenues up 3.1%
Nov 26, 2006 -
Dorel Inds. profits drop 14.2% in fourth quarter
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