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Dorel looks to Latin America for growth especially with its children's products

MONTREAL - Children's products company Dorel Industries is looking to Latin America's emerging consumer base for growth, chief executive Martin Schwartz said Thursday.

Dorel, which also sells bicycles and furniture, has juvenile product operations in Panama that give it a distribution platform through all of Central America and into the Caribbean, Schwartz told financial analysts.

"We are excited about the prospects in Latin America, particularly with the positive results we've experienced to date in Chile," he said after Dorel reported a lower quarterly profit of US$20 million.

Dorel (TSX:DII.B) signed a deal this fall to buy a majority stake in two distributors of infant and children's products in Latin America. The Montreal company acquired a 70 per cent of Best Brands Group SA in Panama and Baby Universe SAS in Colombia.

The venture also expands Dorel's ownership of the highly popular Infanti brand in Latin America, Schwartz said on a conference call.

"With a population base of nearly 130 million people, Colombia, Ecuador, Venezuela and Central America are growing markets which offer mid-term potential from an emerging consumer base," Schwartz said.

"Also worth noting is that even excluding Mexico, Latin America has a very, very large economy and we are now well positioned to prosper there."

Schwartz also said Dorel has put renewed emphasis on putting its international brands in the United States, adding the European Bebe Confort line.

"This brand has done well for us in Europe and with the launch in the U.S. market, we enter our most important category: feeding. Bebe Confort has been providing the European market with products for more than 75 years and we look forward to offering parents in the U.S. a new, natural feeding solution."

Dorel also hopes to change how consumers buy their bicycles with its recent purchase of the Guru Fit System, which adjusts to the bike rider, Schwartz said.

In its third-quarter financial results, Dorel's net income dropped to US$20 million or 63 cents per diluted share from US$23.1 million or 71 cents in the same period last year.

The third quarter of 2011 included a one-time US$8.3 million income tax recovery. Excluding that, earnings per diluted share in the year-ago quarter would have been 46 cents.

Revenue for the quarter increased by $37.5 million to US$613.3 million from a year ago.

According to estimates compiled by Thomson Reuters, the company was expected to post revenues of $595.5 million in the quarter.

"Our core businesses are moving in the right direction even while facing a listless economy," Schwartz said.

Revenue for the recreational, leisure segment, which includes its bicycles, was up 9.1 per cent to $228.9 million. That compared with $209.8 million in the same period last year.

In the juvenile segment, revenue was up 9.7 per cent to $249.1 million compared with $227 million in the same quarter in 2011.

Revenue in the home furnishings division were down 2.7 per cent to $135.2 million from $138.9 year-over-year.

Furnishings sales were down slightly due to a reduction in ready-to-assemble products, partly offset by increases in futons and upholstered furniture.

Established in 1962, the Montreal-based company is one of the world's largest manufacturers of juvenile products such as infant car seats and bicycles in addition to its furniture line.

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

Shares in Dorel closed up $1.02 to $37.70 in trading Thursday on the Toronto Stock Exchange.


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