Dorel’s CEO Upbeat at 2010

Dorel Industries Inc. President and CEO Martin Schwartz told shareholders attending its annual meeting that Dorel's products have traditionally been resilient in recessions.


Despite current and past difficult economic times, consumers have continued to purchase juvenile items and Dorel's diverse product line matches their needs well. The bicycle/fitness industry as a whole has been benefiting from recent attitudes towards the environment and personal health.


Since Dorel acquired Cannondale last year, a new, multi-faceted Worldwide Centers of Excellence program has been developed. The company is establishing five “Centers of Excellence” around the world, with each focused on market leadership in a specific market segment or expertise.


The Recreational/Leisure segment plans on unveiling new Cannondale models in the coming months. “We've been working with an industry-leading designer with the goal of making Cannondale the desired brand in bikes,” noted Schwartz.  Schwinn, GT, Mongoose and SUGOI are also in Dorel's Recreational/Leisure segment.


Schwartz’s comments come on the heels of last week’s announcement that Dorel posted its best year ever in 2008 with revenues of $2.2 billion and net income of $113 million. First quarter 2009 revenues were $525 million and net income was $28 million, lower than last year's first quarter.

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Dorel’s CEO Upbeat at 2010


Dorel Industries Inc. President and CEO, Martin Schwartz,
told shareholders attending its annual meeting that Dorel's products have
traditionally been resilient in recessionary times. Despite current and past
difficult economic times, consumers have continued to purchase juvenile items
and Dorel's diverse product line matches their needs well. The bicycle/fitness
industry as a whole has been benefitting from recent attitudes towards the
environment and personal health.

 

In addition, he said Dorel has always operated in the value
priced home furnishings market. As shoppers look toward less expensive
furniture purchases, they are increasingly turning to the company's
ready-to-assemble furniture products.

 

“Our price points fit the times. Retailers have shifted
gears and are offering consumers products in what we term “opening to mid
price points”, as shoppers of every description are gravitating to the big
box outlets. Dorel excels in these categories with the majority of our sales in
these price points. We are also picking up new listings from competitors. In
times of uncertainty, retailers seek strong, stable suppliers with a history of
delivering, and who will be around for the long term. Dorel fits that bill
perfectly. Our financial strength also provides a high level of comfort,”
said Schwartz.

 

Schwartz also noted that Dorel posted its best year ever in
2008 with revenues of US$2.2 billion and net income of US$113 million. First
quarter 2009 revenues were US$525 million and net income was US$28 million,
lower than last year's first quarter, but “given the context of the
economic situation, we are more than satisfied with the start to the
year,” Mr. Schwartz told his audience.

 

Shareholders were provided with an overview of all three
Dorel segments. Results at Dorel Juvenile Group in the US have been
strong in 2009. Their earnings exceeded plan in the first quarter and order
levels in the second quarter have been strong. The division will be making a
major announcement early in the near future which will unveil a completely
revolutionary advancement in one of Dorel's most important juvenile categories.

 

Juvenile in Europe softer, but strong base remains

 

Currently, the situation in Europe
is different. The economy abroad slowed later than in North America and, as
such, recovery will lag the US.
“We are, nonetheless, optimistic. Ever since we acquired the juvenile
business in Europe in 2003, it has done very
well for us. Over the years we have built upon a very solid base, expanding
operations into many European countries and building market share with our
excellent products and strong management teams there.”

 

A focus on bicycle
innovation

 

Much has been accomplished since Dorel acquired Cannondale
last year. A new, multi-faceted Worldwide Centers of Excellence program has
been developed, in the continuation of Dorel's strategy to become the global
innovation leader in the recreation and leisure markets. Five Centers of
Excellence are being established around the world, with each focused on market
leadership in a specific market segment or expertise. The Recreational/Leisure
segment plans on unveiling new Cannondale models in the coming months with
truly unique features. “We've been working with an industry-leading
designer with the goal of making Cannondale the desired brand in bikes,”
noted Schwartz.

 

Schwinn, GT, Mongoose and SUGOI are also in Dorel's Recreational/Leisure
segment.

 

Home Furnishings
continues to make headway

 

Excellent progress has been made by the management team
dedicated to Home Furnishings. This year's first quarter was the segment's best
since the fourth quarter of 2007, with Ameriwood's domestically-produced RTA
furniture leading the way. The demand for Ameriwood's lines at mass merchants
and DIY centers is a testament to their efforts to concentrate on “back to
basics” items, rebuilding customer confidence and improving efficiencies.

 

The expertise that turned around Ameriwood is now being
centered on Cosco Home & Office. Operations and product offerings are more
focused and they have won several new important, large listings. While the
division still expects to lose money in 2009 due to the cost of resolving
previous years' issues, plans are well on track for a return to profitability
next year.

 

Outlook

 

“The positive results of our efforts are apparent in
the first quarter 2009 results. We are optimistic in Juvenile in North America and have a number of innovative new,
exciting products in the pipeline. The situation in bikes remains unpredictable
as consumer buying patterns have been inconsistent. In Home Furnishings,
indications point to a good year, led by Ameriwood which is now a solid money
maker. Even after considering all of the issues in 2009, our full year outlook
remains unchanged. We are committed to reducing expenses, anticipate cash flow
of at least US$150 million and expect input costs will remain stable through
the year. As previously stated, we do not anticipate 2009 will be as profitable
as 2008 but nor do we expect it to be anywhere nearly as negative as current
market conditions suggest,” concluded Schwartz.

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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