"We launched several new juvenile products during the second half last year and we are confident this will drive new sales in 2004"
Martin Schwartz, Dorel President and CEO

Canadian RTA furniture manufacturer Dorel Industries CEO Martin Schwartz is optimistic about 2004. The company is expecting record sales of between US$750 and US$800 million, with earnings from operations of between 10% and 11% of sales from it's juvenile line.

"While we did see improvement in the U.S. retail climate through the second half of 2003, it is clear that the consumer is not yet back in force," commented Dorel President and CEO, Martin Schwartz. "We launched several new juvenile products during the second half last year and we are confident this will drive new sales in 2004. Nonetheless, a lack of clarity in the retail sector leads us to be conservative looking forward."

For 2004, the company's Home Furnishings segment should record sales of between US$540 million and US$590 million, with earnings from operations of between 11% and 12% of sales.

Of the three business units within the segment, RTA furniture provides the dominant portion of Home Furnishings revenues and earnings. The acquisition of Carina has provided a broader product line and customer base. This along with aggressive sales efforts means that RTA revenues are expected to increase as market share continues to grow. However, several issues are expected to lower margins. Some of the new business that is expected will be at lesser margins than historically achieved. In addition, over the past several months board prices have risen by approximately 5% to 10%. "Board prices have increased quite dramatically over the past few months and with recent capacity reductions in the board industry, prices are expected to continue to rise into the foreseeable future. This puts a squeeze on our margins, but we are hopeful that we will be able to counteract some of these pressures during the second half of the year," explained Mr. Schwartz.

The continued strength of the Canadian dollar also affects RTA's profitability. A portion of Dorel's RTA sales in the United States are generated from Canadian factories. As the Canadian dollar compared to the U.S. dollar is expected to remain stronger in 2004 versus 2003, this will put pressure on earnings.

"Overall, we are being cautious in our 2004 outlook. We have made many changes over the past year in our on-going drive of continuous improvement. We have also added significantly to Dorel's operations. This, clearly, is a much larger Company. 2004 will be a year of integration where all energies will be focused on identifying and implementing efficiencies," concluded Mr. Schwartz.