(Montreal) Managing supply chain disruptions is a daily struggle for Dorel management. The action of the maker of furniture and children’s products fell 11% on the stock market on Friday, after the unveiling of a loss in the first quarter.
Updated yesterday at 2:59 p.m.
“We see progress from week to week, but day by day, it’s really not easy,” says CFO Jeffrey Schwartz during a conference with financial analysts. Something always happens that needs to be fixed, like a piece that gets stuck on a boat due to a fire or a strike in a port. »
The supply chain continues to be “erratic,” said President and CEO Martin Schwartz. For this reason, the Montreal company failed to fill all of its orders. “Dwindling sales contributed to reduced profitability, but other factors, such as freight costs, material costs and warehousing costs, also ate into our profits,” he explained. .
The company has undertaken to repatriate part of the production to simplify its supply. It started producing mattresses at its factory in Montreal. A second production line at this facility is expected to be operational in the second quarter.
“There are several advantages to having our own Canadian production of mattresses,” adds Martin Schwartz. There are no anti-dumping tariffs or taxes, no high shipping costs, and you can get to market faster. »
On the macroeconomic front, the CEO foresees an economic slowdown in Europe in the wake of the conflict in Ukraine and inflation. “For example, in Germany, people are nervous and have limited their spending to essentials. »
The easing of health measures has also reduced households’ appetite for home-related expenses. The company reports that Dorel Home division sales fell 7.5% to $211.5 million. The operating profit of this segment fell from 14.8 million US to 5.5 million US.
The net loss doubles
Earlier Friday, Dorel disclosed that its net loss had doubled in the wake of its logistical issues. The company’s net loss from continuing operations reached $27.2 million, compared to $12.8 million for the same period last year. Revenues, for their part, fell 2.4% to US$428 million.
The children’s products business posted revenue growth of 3.2% to US$216.6 million. The division’s operating loss was US$12.5 million, compared to US$7.6 million for the same period last year.
Dorel shares were down 89 cents, or 11.28%, at $7 at the close of the Toronto Stock Exchange.