Posted by Editoress on 03/10/11
Dorel Industries Inc. (TSX: DII.B DII.A) today announced results for the fourth quarter and year ended December 30, 2010. Revenue for the fourth quarter decreased 1.1% to US$539.5 million from US$545.3 million a year ago. Net income rose 4.2% to US$25.2million, or US$0.76 per diluted share, from US$24.2 million, or US$0.73 per diluted share last year.
Revenue for the full year rose 8.1% to US$2.3 billion as compared to US$2.1 billion in 2009. Net income was up 19.2% to US$127.9 million, or US$3.85 per diluted share from US$107.2 million or US$3.21 per diluted share last year. Excluding the impact of business acquisitions and year-over-year foreign exchange rate variations, mainly in the Juvenile Segment, organic sales growth in 2010 exceeded 7%.
"The fourth quarter was difficult, but we are pleased with Dorel's full year performance. Our divisions effectively managed challenging economic conditions with value-oriented product offerings, a strong commitment to new product development and strategic brand support. In an environment of reduced consumer discretionary spending and rising input costs, Dorel was able to deliver revenue growth of over 8% and improved earnings over the prior year. If there was ever a test of the acceptance of Dorel's brands and products, the past two years have provided it. The fact that we have done well through this period speaks volumes to our strong position in the many global markets in which we operate," commented Dorel CEO and President, Martin Schwartz.
In the fourth quarter Recreational/Leisure revenues increased by US$30.2 million or 17.2%. Organic sales were higher by almost 19% when the impact of varying rates of exchange rates relative to the U.S. dollar is excluded. Sales increased in the mass market category by almost 20%, supported by the successful Schwinn brand marketing campaign initiated earlier in the year and repeated in November to coincide with the holiday shopping period. Sales to IBD customers also grew by approximately 20% as successful new model introductions have been met with enthusiasm in both Europe and North America. Importantly, the gains are in the majority of the brands sold to IBD customers and are not limited only to Cannondale.
Earnings improved from last year based on increased sales and higher margins, but results at the Apparel Footwear Group ("AFG") were disappointing and were a drag on the segment's earnings. Despite its small size relative to the total segment, quarter-over-quarter earnings decreased by over US$2 million at AFG. Going into 2011, renewed focus on this business and earnings improvement initiatives are expected to help the segment's performance in 2011.
For the full year, Revenues were up 13.7% to US$775.0 million, compared to US$681.4 million a year ago. Organic sales growth was approximately 11%. All divisions contributed to the increase, with the exception of AFG whose sales were flat. There were several reasons for the improvement. In North America, the successful Schwinn advertising campaign increased sales, particularly at mass merchants, contributing to single digit sales growth. The advertising spent for this initiative exceeded US$5 million for the year. Sales to large customers in Canada were up over 25% from the prior year and have more than doubled since 2008. Cycling Sports Group (CSG) sales to IBD customers in both the U.S. and Europe increased by over 20% with new product innovation driving sales of new models introduced in the year. Sell through at retail was strong and market penetration increased.
Earnings in the segment for the year increased by 31.3%, as many of the positive elements influencing the fourth quarter were prevalent throughout the year. The business model put in place soon after the Cannondale / Sugoi acquisition in 2008, began to pay dividends in 2010. A renewed focus on supporting the segment's many known brands and a clearer direction on new product development paid dividends in the form of improved earnings.
Complete financial statements will be available on the Company's website, www.dorel.com
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