Dorel’s overall growth has been supported by a solid performance from Dorel Juvenile, the baby and nursery arm of the business, with adjusted operating profit up by 0.5% despite organic revenue decreasing by the same amount year-on-year.
Group results for the third quarter (ending September 30, 2019) saw revenue of $685.7 million, compared to US$670.4 million in 2018, an increase of 2.3%.
Dorel Juvenile saw Q2 revenue drop by 2.9%, to $222.9 million, with organic revenue dropping by 0.5%. Despite this, organic sales growth in North America have continued to increase, with sales in Brazil growing double digits and Chile also seeing substantial increases in same store sales, compared to 2018.
The Dorel Juvenile restructuring programme, which began in early 2019, is continuing and running as planned. Savings of $5 million are expected for 2019, with annual cost savings of between $12 million and $15 million predicted once the programme has been completed.
“As expected and previously communicated, the third quarter was a difficult one primarily due to various issues related to U.S. imposed tariffs. We raised prices in the quarter and this has had several negative consequences,” said Dorel president and ceo, Martin Schwartz.
He continued: “The new product development process at Dorel Juvenile is delivering significantly improved time-to-market, though increased earnings are yet to materialise. Inventory reduction across all segments is a strong focus and is on track, and new sourcing strategies are being implemented where appropriate… Adjusted operating profit at Dorel Juvenile was up overall, but challenges remain in Europe.”
The official release also states that: “Included in Dorel’s 2019 results is an impairment loss on trade receivables of $1.6 million due to a significant retail chain in the UK entering administration.”