Dorel Reports Second Quarter Results
- Quarter organic revenue up 5% - Home Furnishings revenues increase 30% in the quarter - Juvenile China factories integration ahead of plan - New model year bicycles to drive sales in second half at Dorel Sports - Currency continues to impact earnings
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 08/06/15 -- Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) today announced results for the second quarter and six months ended June 30, 2015. Total revenue for the quarter was US$669.6 million, up 2.1% from US$655.8 million recorded in the same period last year. Adjusted net income was US$16.6 million or US$0.51 per diluted share, compared to adjusted net income of US$19.8 million or US$0.61 per diluted share a year ago. Reported net income was US$16.2 million or US$0.50 per diluted share, compared to US$15.2 million or US$0.47 per diluted share in the second quarter of 2014.The net negative impact of foreign exchange on Dorel''s earnings equated to approximately US$0.23 per diluted share for the second quarter and US$0.53 per diluted share for the first six months of 2015.
Revenue for the six months increased 2.4% to US$1.34 billion compared to US$1.30 billion last year. First half adjusted net income reached US$28.4 million or US$0.87 per diluted share, compared to adjusted net income of US$49.2 million or US$1.52 per diluted share last year. Reported net income for the period was US$27.8 million or US$0.86 per diluted share, compared to net income of US$40.0 million or US$1.24 per diluted share in the first half of 2014.
"In Home Furnishings we are having a breakout year with revenues increasing by 29.9% in the quarter and 23.1% year-to-date. Operating profit was up 65.3% and 36.9% in the quarter and six months respectively. Dorel''s Juvenile and Sports segments continue to operate in an environment of challenging foreign exchange rates as the US dollar remains strong against practically all currencies. This had a significant effect on our earnings, impacting operating profit in the two segments combined by a net negative amount of approximately US$12 million in the second quarter alone, bringing the net negative FX year-to-date impact to approximately US$25 million. We have done a good job mitigating this impact with selective price increases and other proactive measures and our results reflect that. There have been numerous improvements at our Dorel Juvenile China factories and we are pleased with the progress of the integration process," said Dorel President & CEO, Martin Schwartz.
Dorel Juvenile
Dorel Juvenile second quarter revenue increased US$13.6 million or 5.4% to US$264.9 million and was up US$19.1 million or 3.7% to US$539.6 million year-to-date. Organic revenue growth was in all major regions and increased by approximately 7% in the quarter and 5% year-to-date. In Europe, improved car seat sales in most Northern markets drove the growth with US sales increases coming from juvenile wooden furniture. In local currencies, sales in Latin America continued to increase in the low double digits.
Second quarter adjusted operating profit of US$15.4 million, which included a full quarter of results from Dorel Juvenile China, declined by 6.0% from $16.3 million a year ago. Year-to-date adjusted operating profit was US$25.6 million, a decline of 28.7% from US$36.0 million in 2014. Segment operating profit was impacted by a net negative impact of foreign exchange rates of approximately US$5 million for the second quarter and US$11 million for the first six months of the year.
The integration process of Dorel Juvenile China is ahead of plan with all operational areas being addressed. As part of the change management process, particular emphasis is being placed on operational improvements at the Zhongshan factory, staffing capabilities and growing the domestic sales business. The research and development groups based in Taiwan and China are now aligned with the segment''s global teams based in the US, Europe and Israel.
Dorel Sports
Second quarter Dorel Sports revenue decreased by US$35.2 million, or 12.3% to US$251.1 million compared to last year''s US$286.2 million. Six month revenue decreased by US$46.6 million, or 8.8% to US$480.0 million from US$526.6 million a year ago. Organic revenue declined by approximately 5% in the quarter and 2% year-to-date, after removing the impact of varying foreign exchange rates year over year.
The Brazilian based Caloi division had double digit organic revenue growth in local currency as that division rebounded from last year''s soft second quarter due to the negative impact of World Cup events. Sales also increased organically in Japan and the UK. Offsetting this, was organic sales decline in the quarter in Europe as dealers purchased inventory in the first quarter ahead of price increases implemented in April and in anticipation of the launch of new model-year 2016 products in the third quarter. New pricing on model year 2016 bicycles is being announced and the introductions have received excellent reviews from retailers and media. Sales decline in North America was due partly to a wet month of May as well as to mass customers reducing inventory levels in the sporting goods category.
Second quarter adjusted operating profit, excluding restructuring and other costs, decreased by US$7.7 million, or 42.1% to US$10.7 million, compared to US$18.4 million a year ago. For the six months, adjusted operating profit was down US$13.3 million, or 37.6% to US$22.0 million, compared to US$35.3 million in 2014. The US dollar appreciation against most of the currencies in Dorel''s markets accounted for a net negative impact on the segment''s operating profit of approximately US$7 million during the second quarter and US$14 million during the first six months.
Dorel Home Furnishings
Home Furnishings revenue increased by US$35.4 million or 29.9% to US$153.6 from US$118.3 million. Six months revenue was up US$59.1 million or 23.1% to US$315.5 million from US$256.4 million last year. Driven by an expanded product line that resonates with consumers, the segment''s sales to Internet retailers continued to drive revenue, representing over 34% of total segment sales in the quarter. As in the first quarter, sales to brick and mortar stores also increased significantly leading to double digit growth.
Operating profit was up US$3.4 million or 65.3% to US$8.7 million from US$5.3 million in the prior year. Year -to-date operating profit grew US$4.9 million or 36.9% to US$18.2 million from US$13.3 million. All divisions posted improved operating results.
Other
The second quarter and six months ended June 30, 2015 reported tax rates were 8.1% and 15.6%, respectively versus 20.2% and 18.1% for the same periods last year. For the full year the annual tax rate is expected to be between 15% and 20%. The main causes of the variations year-over-year are changes in the jurisdictions in which the Company generated its income, the recognition of tax benefits related to tax losses following a Canadian reorganization and the decrease in the fair value adjustments related to the forward purchase agreement liabilities which are non-deductible for tax purposes.
Quarterly dividend
Dorel''s Board of Directors declared its regular quarterly dividend of US$0.30 per share on the outstanding number of the ompany''s Class A Multiple Voting Shares, Class B Subordinate Voting Shares, Deferred Share Units and cash-settled Performance Share Units. The dividend is payable on September 3, 2015 to shareholders of record as at the close of business on August 20, 2015.
Outlook
"Dorel Home Furnishings has established substantial momentum in the first half and we are bullish on the outlook over the balance of the year. Our strength in e-commerce sales in our categories is a tribute to the investments made in the business over the past several years. We are now consistently benefiting from the product development and logistics initiatives put in place as our retail partners have come to rely on us for e-commerce solutions to service consumers. Even brick and mortar sales are benefiting from strong POS at major retailers," stated Martin Schwartz, Dorel President & CEO.
"Dorel Juvenile had a good quarter and approached last year''s earnings levels despite the very challenging currency issues. We are ahead of our plan to be breakeven by the fourth quarter at Dorel Juvenile China and we see further upside as we near the end of the year. The third quarter will not be as strong as this year''s second quarter due to the timing of sales and additional spending to support several new product launches and marketing initiatives.
"Dorel Sports new product launches are expected to deliver better results in the second half versus last year, driven by the Cycling Sports Group and Pacific Cycle. Most of the benefit will be in the fourth quarter due to the seasonality of our business and the positive impact of the Christmas shopping season.
"Since the end of the quarter, most currencies have further declined against the US dollar. We therefore remain cautious in our outlook through 2015 for our Sports and Juvenile segments," concluded Mr. Schwartz.
Conference Call
Dorel Industries Inc. will hold a conference call to discuss these results today, August 6, 2015 at 1:00 P.M. Eastern Time. Interested parties can join the call by dialing 1-877-223-4471. The conference call can also be accessed via live webcast at . If you are unable to call in at this time, you may access a recording of the meeting by calling 1-800-585-8367 and entering the passcode 83573223 on your phone. This recording will be available on Thursday, August 6, 2015 as of 4:00 P.M. until 11:59 P.M. on Thursday, August 13, 2015.
Complete condensed consolidated interim financial statements as at June 30, 2015 will be available on the Company''s website, , and will be available through the SEDAR website.
Profile
Dorel Industries Inc. (TSX: DII.B)(TSX: DII.A) is a world class juvenile products and bicycle company. The Company''s safety and lifestyle leadership is pronounced in both its Juvenile and Bicycle categories with an array of trend -setting, innovative products. Dorel Juvenile''s powerfully branded products include global juvenile brands Safety 1 st, Quinny, Maxi-Cosi, Bebe Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Dorel Sports, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel Home Furnishings markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel Industries Inc. has annual sales of US$2.7 billion and employs approximately 11,200 people in facilities located in twenty-five countries worldwide.
Caution Regarding Forward Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel''s expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits Dorel will derive from them. Forward- looking statements are provided in this press release for the purpose of giving information about Management''s current expectations and plans and allowing investors and others to get a better understanding of Dorel''s operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from Dorel''s expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channels; foreign currency fluctuations; customer and credit risk, including the concentration of revenues with few customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets; and there being no certainty that Dorel''s current dividend policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel''s annual Management Discussion and Analysis and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously-mentioned documents are specifically incorporated herein by reference.
Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on Dorel''s business, financial condition or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward- looking statements as a prediction of actual results.
Non-GAAP measures
As a result of the restructuring and other costs incurred in both 2015 and 2014, the Company is including in this press release the following non-GAAP financial measures: "adjusted cost of sales", "adjusted gross profit", "adjusted operating profit", "adjusted finance expenses", "adjusted income before income taxes", "adjusted income taxes", "adjusted net income", and "adjusted earnings per basic and diluted share". The Company believes that this results in a more meaningful comparison of its core business performance between the periods presented. These non -GAAP financial measures do not have a standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers. Contained within this press release are reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
(All figures are in thousands of USD, except per share amounts)
Dorel Juvenile
Dorel Sports
Contacts:
MaisonBrison Communications
Rick Leckner
(514) 731-0000
Dorel Industries Inc.
Jeffrey Schwartz
(514) 934-3034
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Datum: 06.08.2015 - 06:16 Uhr
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