Dorel Q2 profit nearly triples to US$31.3 million as revenue rises 29.3 per cent

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MONTREAL - The Beijing Olympics will shine a spotlight on a Canadian bicycle manufacturer as several international athletes and members of the Chinese national team ride Dorel Industries Inc. (TSX:DII.B) Cannondale and GT bikes in their quest for gold.

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Submitted by Dorel Industries

Having international athletes ride Dorel’s bicycles at the Beijing Olympics has the potential of significantly adding exposure for its brands, says company CEO Martin Schwartz.

Submitted by Dorel Industries

A total of 23 riders are expected to compete in road, mountain, triathlon and bicycle motorcross races, while the Chinese national team mounts the company's Mongoose BMX bikes.

"All of this has the potential of significant added exposure for these brands," Dorel CEO Martin Schwartz said Thursday during a conference call to discuss the company's second-quarter results.

The newly acquired Cannondale group's sponsorship of the Liquigas team has already turned to gold, with the team winning the Tour de Suisse and posting a strong showing at the Tour de France.

Stronger sales at its mass merchant and higher-end IBD bike business helped to boost Dorel's overall revenues and significantly improve as the company's diversified global business overcame a slowing North American economy.

Revenue for the Montreal-based manufacturer of consumer products such as child car seats, home furniture and bicycles, rose to US$593.7 million.

That's up 29.3 per cent from US$459.0 million for the same period a year ago.

Dorel, which reports in U.S. dollars, said its net income for the quarter was $31.3 million or 94 cents per diluted share, nearly triple the $10.8 million or 32 cents per diluted share in 2007.

While some companies have been hurt by the slumping economy, Dorel posted its best ever half-year results, with record revenues and income.

Six-month revenue rose 25.7 per cent to $1.15 billion, while net income increased to $66.5 million from $38.8 million in 2007.

"Considering the difficult North American economic environment and the continuing negativity around consumer spending, all three of our business segments have performed extraordinarily well," Schwartz told analysts.

Parents may reduce the amount they spend on juvenile products during tough economic times, but laws requiring the use of car seats creates a regulated market that preserves sales, he said.

In addition, higher fuel prices, environmental concerns and a desire to be fit are increasing the popularity of bicycles.

After years of decline, Dorel's home furnishings division Ameriwood has also shown signs of improvement.

Recreation leisure sales are expected to slip during the seasonally quieter second half, but the strong first six months suggests Dorel will post solid 2008 results, he said.

Juvenile revenues grew 19 per cent to $291.5 million, as earnings from operations rose 34.5 per cent to nearly $30 million.

The recreation/leisure segment had $17.7 million earnings on $191.7 million of revenues, 60 per cent higher than the same period of 2007.

Home furnishings earnings were nearly $4 million compared to a $6.3 million loss as revenues increased 17 per cent to $110.5 million.

Dorel's class B shares gained $1, or 3.03 per cent, to $34 in afternoon trading on the Toronto Stock Exchange. Over the past year, the shares have ranged between $25.86 and $35.34.