Dorel home furnishings profit up 6.8% in second quarter

Michael J. Knell -- Furniture Today, August 14, 2012

MONTREAL — Dorel Inds.' home furnishings segment posted respectable improvement in operating profit for the second quarter but was still running behind for the year to date, the consumer goods giant reported.

Dorel said total revenue was $633.7 million, up 2.4% from $619 million for the same quarter last year. The company reports in U.S. dollars.

Net income gained 32% to $30.3 million or 95 cents per share, compared with $23 million or 70 cents per share for the corresponding quarter of 2011.

Year-to-date revenue rose 2.3% to $1.25 billion with net income for the six months increasing by 9.9% to $59.5 million or $1.85 per share.

However, the home furnishings segment - which includes ready-to-assemble specialist Ameriwood, Cosco Home & Office and Altra Furniture, among others - had second quarter revenues of $127 million, a minor uptick of 0.8% from a year earlier. Operating profit was up 6.8% to $6.7 million.

"For the quarter, home furnishings revenues increased slightly versus the prior year as sales to the Internet sales channel offset declines in the segment's other major channels of distribution," the company said in a statement. "Operating profit for the quarter increased versus both the prior year and this year's first quarter, as profitability was aided by a more stable cost environment. Partially offsetting this was a less profitable sales mix at several of the segment's divisions."

For the first half of the year, home furnishings revenue was down 2.3% to $257.7 million. Operating profit in the segment was down 10.9% to $12.5 million.

The company also announced it will double its quarterly dividend to 30 cents for all three major share classes beginning in September.

"Dorel performed well in our various business segments, despite a stubborn and unstable economy in the majority of our geographic markets. We have maintained the positive momentum established in the final quarter of 2011 through a combination of strong marketing and judicious cost containment," Martin Schwartz, president and CEO, said in a statement.

Dorel's juvenile segment - which produces car seats and a variety of other baby products - saw its sales advance 4.4% in the second quarter to $254.8 million. For the year, sales are up 2.1% to $524.3 million.

Meanwhile, the company's recreation and leisure division - which makes bicycles and sporting apparel - had sales growth of 1.1% for the quarter to $251.9 million and 5.2% for the year to date, to $472.8 million.

Looking to the rest of the year, Schwartz said Dorel's pre-tax earnings are expected to be higher than last year, driven by advances in the juvenile and recreational segments. "We expect home furnishings' operating profit to be slightly below last year's levels, he added.