Dorel intent on growing

Posted by By Gary Roethenbaugh at 29 May, at 00 : 00 AM Print

Coming off a record first quarter, Dorel Industries – which owns tri related brands such as Cannondale, GT, SUGOI and Schwinn – is intent on growing and has maintained the required investments for the future.

Dorel President and CEO, Martin Schwartz, reported to shareholders that the company has remained committed to product development innovation, despite the recession. "This resulted in the introduction of a number of excellent new products in 2009, which has further strengthened our competitive position in our core Juvenile and Recreational/Leisure segments. This positions us well for the months ahead."

Schwartz noted that all three company segments experienced significant increases during the most recent quarter, ended 31 March 2010.

Dorel’s Recreational/Leisure segment turned in a solid performance for the first three months. Bike sales were in high gear during the first quarter, up US$20 million year on year, with significant improvement at the mass merchant level. The Schwinn brand is currently being promoted through a national multi-million dollar advertising campaign. Cycling Sport Group’s (CSG) sales have also increased as new Cannondale models were ‘enthusiastically received’.

"There is every indication that this momentum will continue over the next few months," said Schwartz. "The Cannondale product is the best it’s been in years and the results are clear. A record number of new dealers have been added since January, many in key US markets such as Los Angles, Northern California and Colorado.

“Another growth path is our new Apparel Footwear Group (AFG), which combines the branded apparel of SUGOI, Cannondale, GT, Schwinn, IronHorse and Mongoose, in both custom and its regular offerings. We’ve barely scratched the surface in the expanding custom market and expect to triple this business within 5 years."

"Consumer confidence has risen in many of Dorel’s markets including in most of Europe,” added CFO, Jeffrey Schwartz. “While margins could be affected by rising commodity and freight costs, the momentum we have established so far this year positions us to benefit from further new product introductions and our brand equity."

He also noted that Dorel management is very confident that a deal will be closed by next month with the company’s bankers concerning its revolving debt. Earlier this year Dorel refinanced its long-term debt by issuing US$200 million of Senior Guaranteed Notes at fixed rates. Meanwhile, earlier this month, Dorel’s Board decided to increase the quarterly dividend by 20% to US$0.60 per share per annum.

In his concluding remarks, Martin Schwartz stated that Dorel has grown through significant acquisitions. "We continue to keep our eyes open for companies in our sectors that are the proper fit. While there is nothing imminent, Dorel has the balance sheet and the capability to digest another key transaction.

“The management structure we put in place two years ago was designed with this in mind. We must ensure that we capitalise on further opportunities, deliver long-term sustainable growth and above all, maximize shareholder value."

www.dorel.com

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