Martin Schwartz, president and CEO of Montreal-based Dorel
A turnaround in Dorel's home furnishings division pushed the juvenile, bike and furniture manufacturer to record $30.2-million (U.S.) in third-quarter profits, despite lower overall revenues.
The Montreal-based company, which reports in U.S. dollars, said Thursday it earned 91 cents per share for the period ended Sept. 30, up 11.1 per cent from 82 cents a year earlier when profits totalled $27.2 million.
Revenues decreased 6.1 per cent to $518.5-million.
Analysts polled by Thomson Reuters had forecasts 72 cents of earnings on $522-million of revenues.
Dorel CEO Martin Schwartz said the company exceeded last year's earnings despite challenging economic conditions by containing costs and focusing on maximizing margins.
Although home furnishings are the smallest of its three operating divisions, it was the only one which posted increased earnings from last year.
Earnings were $12.5-million, up from $1.9-million on $125.4-million of sales.
The improvements was led by domestically produced furniture and futons. Lower material costs, favourable currency and increased operational efficiencies improve gross margins by 730 basis points to 18 per cent.
The juvenile segment, which accounts for 29 per cent of Dorel's revenues, saw earnings fall 25 per cent to $26.1-million. Revenues fell 5.8 per cent to $247.9-million.
Dorel said a decline in revenues has moderated from the beginning of the year.
The decrease was most pronounced in Europe, primarily due to the weak U.S. dollar, along with weak market conditions. European revenues fell 10 per cent. Excluding currency, the decline was 5 per cent.
Bike segment earnings decreased 26.8 per cent to $4.9-million as revenues dropped 11 per cent to $145.2-million.
The reduction was due primarily to a reduction of sales to mass merchants. Consumers purchased lower-priced items, which carry lower margins.
Excluding acquisitions and currency adjustments, revenues fell about 10 per cent for the quarter.
On the Toronto Stock Exchange, Dorel's shares surged 6.56 per cent, gaining $1.95 to $31.66 (Canadian) in morning trading.