Dorel Industries Inc. of Montreal says its net income fell sharply in the fourth quarter, dropping nearly two-thirds to $11 million US due to difficult markets and restructuring in the division that makes bicycles.
Dorel makes bicycles under several brands including Cannondale and Schwinn, home furniture, and child-safety car seats sold under numerous brands such as Safety 1st and Cosco.
The Montreal-based company's profit, expressed in U.S. currency, amounted to 34 cents per share before adjustments. A year earlier, net income was $29.1 million US or 91 cents per share.
Dorel has shut its last North American bicycle assembly plant, Cannondale in Pennysylvania, and shifted the work to Asia. It bought the high-end bike maker in 2008 to add to its mass-market Schwinn line of bicycles.
Dorel president and CEO Martin Schwartz said Tuesday that the company's 2013 performance was disappointing.
"A number of the issues we faced were industry and economy related, while others were the result of less than perfect execution on our part," Schwartz said.
"Matters in our direct control are being addressed and there has been definite progress," he said in a news release.
Excluding the impact of restructuring its bicycle business, Dorel's adjusted net income was $19.2 million US or 60 cents per diluted share.
That's well below analyst estimates, which had already been reduced after Dorel announced in a month ago that its leisure and recreation business would be hurt by weak bicycle sales and prices.
Analysts had recently estimated Dorel would have 90 cents per share of net income, or 77 cents per share on an adjusted basis.
Dorel's overall revenue during the three months ended Dec. 30 was $633.5 million, up 1.8 per cent from a year earlier, with the leisure and recreation segment increasing 8.3 per cent to $245.5 million.
Bike sales hurt by global downturn
However, the bicycle business also produced less profitable sales amid a global downturn, supply problems at Dorel and the cost of restructuring that part of its business.
Dorel recognized $13.5 million US pre-tax restructuring charges during the quarter, contributing to a $5.4 million US operating loss — compared with a year-earlier operating profit of $16.5 million.
Excluding the restructuring charges, the leisure and recreation segment posted $8.1 million in operating profit.
The juvenile segment that makes car seats saw revenue drop 4.5 per cent to $255.2 million from $267.4 million, but it continued to have an operating profit of $18.4 million, down 1.4 per cent from $18.6 million.
The home furnishings segment increased revenue 3.2 per cent to $132.8 million from $128.6 million, but its operating profit dropped 31.4 per cent to $5 million from $7.3 million.
Dorel's revenue for the full year was $2.4 billion US, down 2.2 per cent from $2.5 billion in 2012, while its net income dropped by half to $57.7 million or $1.79 per diluted share in 2013 from $108.5 million or $3.39 per diluted share.
Excluding full year restructuring charges, Dorel's adjusted net income for the year was US$67.1 million or US$2.09 per diluted share.