Dorel Industries Inc. reported that revenues for the fourth quarter increased 4.6% to $479.9 million from $458.9 million in the year-ago quarter. Net income decreased 14.2% to $19.2 million, or 57 cents per diluted share, from $22.3 million, or 67 cents per diluted share, in Q4 2007. Excluding restructuring costs, net income in the 2007 quarter was $24.0 million, or 72 cents per diluted share.


Revenue for the year rose 20.3% to $2.2 billion versus $1.81 billion in the prior year, while net income grew 29% to $112.9 million, or $3.38 per diluted share, from $87.5 million, or $2.63 per diluted share, in the prior year.  Excluding restructuring costs in 2007, net income for that year was $100.1 million, or $3.01 per diluted share.  All markets experienced sales increased, with an organic sales growth of 5% in North America and 7% growth in Europe.


Organic sales growth grew 8.0%, driven by the core bicycle business with sales gains at the majority of the mass merchants.


Inventories at year-end were up 58.0% to more than $509 million.
In addition to the increase in inventories due to the acquisitions of Cannondale/SUGOI and PTI, inventories were up substantially due to significant reductions by retailers in the fourth quarter and higher average input costs in 2008.


Company President and CEO Martin Schwartz commented, “If we take [the inventory adopted through the acquisition] out, there is an actual increase of about $122 million of inventory. Of that $122 million, about just over 25% of that is attributable to higher cost of goods that we are carrying now… We are going to see a sizeable portion, maybe not half of it but maybe close to half of it, up to half of it being reduced in the first quarter.”  They expect to sell it off at full margin.
The bulk of the inventory is in Pacific Cycle and recreational and bikes.