Dorel furnishings sales sag but other segments better
By Michael J. Knell -- Furniture Today, March 24, 2008
Montreal — Dorel Inds. said its home furnishings revenues declined last year, but gains in the juvenile and recreational segments lifted the consumer products giant to modest sales gains.
Dorel's total revenues for the fourth quarter, ended Dec. 30, were $458.9 million, up 2.4% from the comparable period the previous year. Net income grew 3.1% to $22.3 million or 67 cents per share.
For all of 2007, revenue grew 2.4% to $1.81 billion. Net income was down 1.5% at $87.5 million or $2.63 per share, compared with $88.9 million or $2.70 per share in 2006.
Dorel reports its financial results in U.S. dollars.
Revenues in the home furnishings segment fell 13.9% in the fourth quarter to $125 million and were down 12.3% for the year to $475.3 million. On a positive note, the company said earnings from operations in the segment rose 19.9% to $10.4 million in 2007.
Dorel CEO Martin Schwartz attributed the segment's sales decline mainly to the slowdown in the U.S. housing market. Divisions experiencing the biggest sales declines were ready-to-assemble furniture specialist Ameriwood and Dorel Asia, where revenues fell more than 10% in 2007, while Cosco Home & Office and Dorel Home Products were essentially flat year over year.
Despite the sagging sales, Schwartz told analysts in a year-end conference call that the "home furnishings (segment) remains an important asset of Dorel and we will continue to invest in it."
Dorel said its earnings were reduced by previously announced restructuring at Dorel Europe and Ameriwood. Excluding these costs, net earnings were $24 million or 72 cents per share, compared with $24.4 million or 74 cents per share in fourth quarter 2006.
For the year, 2007 adjusted net income excluding restructuring costs was $100.1 million or $3.01 per share, up from $92 million or $2.80 per share in 2006.
Revenues in Dorel's juvenile segment climbed 8.4% in 2007 to $963.6 million, and grew 10% in the recreational/leisure segment to $374.8 million.
"The current economic situation, particularly in the U.S., does not allow for the accurate prediction of consumer trends and hence the outlook for the complete year cannot be seen with clarity," said Schwartz. "Nonetheless, we have not witnessed any slowdown of consumer spending in Dorel's products during the first two months of 2008."
| Dorel Inds. | |||
|---|---|---|---|
| Owns Ameriwood, Charleswood, Cosco and Ridgewood | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/30 | 2007 | 2006 | Change |
| (a) Includes pretax restructuring costs of $1.8 million in the 2007 quarter, $14.5 million in the 2007 year and $3.7 million in the 2006 quarter and year. | |||
| Revenues | $458,853,000 | $447,930,000 | 2.4% |
| Operating income | 48,582,000 | 44,093,000 | 10.2% |
| Net income (a) | 22,348,000 | 21,675,000 | 3.1% |
| Earnings per share | 0.67 | 0.66 | 1.5% |
| Year ended 12/30 | 2007 | 2006 | Change |
| Revenues | $1,813,672,000 | $1,771,168,000 | 2.4% |
| Operating income | 193,456,000 | 178,982,000 | 8.1% |
| Net income (a) | 87,492,000 | 88,865,000 | (1.5%) |
| Earnings per share | 2.63 | 2.70 | (2.6%) |
