Dorel Industries Inc., which owns one of North America's largest bicycle businesses, warned investors Jan. 29 that it expects the strong dollar to have a “significant negative impact” on its earnings in fiscal 2015 even though it expects to mitigate some of the impact by raising prices.
The Canadian-based company earns just over half its net income from Europe, South American and Asia. Dorel Sports, which accounted for $918.7 million, or 38 percent of the company's sales in 2013, sells a significant number of Cannondale bicycles in Europe and owns Brazil's largest bicycle manufacturer – Caloi. Its other brands, which include GT, Mongoose and Schwinn bicycles and Sugoi cycling apparel, are also manufactured primarily in Asia and sold globally.
“In 2014, the Euro was an exception to most other currencies against the U.S. dollar with a significant decline in value only occurring in December,” stated Dorel President & CEO, Martin Schwartz.. “However, this decline has continued into 2015. The Euro is currently at its lowest level in five years and therefore is expected to depress Dorel's 2015 results.”
To counter the negative impacts, Dorel is trying to push through price increases on both new and continuing products across all three of its segments. Dorel Juvenile makes baby strollers and other products for infants, while Dorel Home Furnishings makes ready-to-assemble furniture.
“New products currently being launched reflect the currency factor and are priced accordingly; further, we are working with many of our retail partners on implementing suitable price increases,” Schwartz said. “Recent reductions in oil prices and many commodities will help offset the higher U.S. dollar as will the strength of the U.S. economy, where all three of our segments have a significant presence.”
Dorel will announce full-year 2014 results on March 16, 2015.
