Dorel Industries Inc. provided an update on its financial guidance indicating that all three of its segments are continuing to deal with supply chain challenges, creating delays and incremental costs that it expects will extend into 2021.

In reporting third-quarter earnings on November 6, Dorel had said visibility on earnings for the fourth quarter was more difficult as the then-expected second wave of COVID-19 was beginning to have a significant impact, particularly in Europe. Since then, the second wave has spread to other markets where it is also expected to have a significant impact.

Dorel cited three supply chain challenges:

  • A scarcity of container availability out of Asia is disrupting its supply chain and impacting its ability to satisfy customer demand, which remains strong for the Sports and Home segments;
  • Critical shipments are being made at very high shipping rates, while others are delayed, resulting in a material increase in container costs and negatively impacting costs and profitability;
  • The Chinese Yuan (RMB) has risen in value against the U.S. dollar by approximately 7 percent since July 1, 2020. With the majority of its supply being sourced from China and invoiced in U.S. dollars, resulting in price increases by its suppliers; and
  • Bicycle and furniture factories in Asia, as well as its suppliers, are running at full capacity, further limiting the ability to negotiate pricing on its purchases.

Dorel said in its statement, “We confirm the statement in our third-quarter earnings press release that the fourth quarter will be challenging and that our fourth-quarter adjusted operating profit will likely decrease to levels similar to those of the prior year’s fourth quarter. Further, we believe that the challenges we face in the fourth quarter will continue in the first quarter of 2021 and may continue thereafter.”

Dorel also provided an update on its going-private transaction. Public Shareholders are being encouraged to vote well before the deadline of 5:00 p.m. (EST) on Friday, January 8, 2021.

Dorel makes juvenile products, bicycles and home products. Dorel Sports’ brands include Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi, and IronHorse.

Photo courtesy Dorel Industries