BUSINESS

Dorel Industries doubles quarterly dividend, reports profit up from year ago

08/09/2012 10:43 EDT | Updated 10/09/2012 05:12 EDT
MONTREAL - Manufacturing company Dorel Industries Inc. (TSX:DII.B) doubled its dividend on Thursday as it reported a sharp jump in quarterly profits.

The Montreal-based company, which keeps its books in U.S. dollars, said it would increase its quarterly payout to 30 cents per share from 15 cents.

The increase came as Dorel reported a second-quarter profit of $30.3 million or 95 cents per share, up from $23 million or 70 cents per share a year ago.

Revenue improved to US$633.7 million from $619 million.

The average analyst estimate had been for a profit of 92 cents per share, according to Thomson Reuters.

"We are optimistic about our long-term future earnings and are confident in our ability to sustain an increased dividend, thereby enhancing total return to our shareholders," Dorel president and chief executive Martin Schwartz said in a statement.

"Dorel performed well in our various business segments despite a stubborn and unstable economy in the majority of our geographic markets. We have maintained the positive momentum established in the final quarter of 2011 through a combination of strong marketing and judicious cost containment."

RBC Capital Markets analyst Tal Woolley called the results positive as the company improved "meaningfully year-over-year" and noted the dividend was a key reason to hold the stock.

"This has been a key part of our investment thesis at Dorel," Woolley wrote in a note to clients.

On the Toronto Stock Exchange, Dorel shares closed up $1.13, or 4.1 per cent, at $28.78 in trading Thursday.

In its outlook for 2012, the company said its pre-tax earnings for the second half this year are expected to be higher than last year, driven by advances in its Juvenile business.

"Specifically, significant progress in North America and a greater contribution from Latin America will ensure that we improve upon the disappointing third quarter in 2011," Schwartz said.

The company's recreational-leisure business also remains on track to exceed last year's record earnings, while its home furnishings' operating profit is expected to be slightly below last year's levels.

"Our pre-tax income improvement expected for the balance of the year assumes exchange rates similar to those of today, but a further decline in currencies, especially the euro, could negatively impact future earnings," Schwartz said.

Dorel is one of the world's largest manufacturers of juvenile products such as infant car seats and bicycles. It also makes ready-to-assemble furniture.

Its juvenile brands include Safety 1st, Quinny, Cosco and Maxi-Cosi, while it sells bikes under the Cannondale, Schwinn, GT, Mongoose and IronHorse marks.