Dorel Industries Inc. is warning that supply chain disruptions that are worse than previously thought will hamper its fourth-quarter results after contributing to a US$37-million loss in its latest quarter.
The Montreal-based maker of home furniture, bicycles and products for young children says its net loss equalled US$1.14 per diluted share in its third quarter, compared with a profit of US$26.2 million or 80 cents per share a year earlier.
The results included an US$67.1-million charge related to a an unfavourable tax ruling confirmed by the Luxembourg Administrative Court over an internal corporate reorganization in 2015.
The company, which keeps its books in U.S. dollars, says its adjusted loss was US$99.8 million or US$3.07 per share, down from a profit of US$28.7 million or 87 cents per share in the third quarter of 2020. Revenue for the three months ended Sept. 30 totalled US$740.9 million compared with US$753.4 million in the same quarter last year.
The company announced last month an agreement to sell the Dorel Sports bicycle business that makes brands such as Cannondale, Mongoose and Schwinn to Dutch mobility group Pon Holdings B.V. for US$810 million.
The loss from continuing home and juvenile operations was US$68 million or US$2.09 per share on US$437.2 million of revenues, compared with a profit of $9.3 million or 28 cents per share on US$447.8 million of revenues in the 2020 quarter.
“The ongoing global supply chain disruptions present challenges to meet the continuing consumer demand for Dorel’s products,” stated CEO Martin Schwartz.
“The risks and rising costs associated with the global supply chain disruptions that we identified in our outlook at the end of the second quarter impacted our third quarter performance even more negatively than anticipated. This situation persists. Therefore, our expectations for the fourth quarter are now lower than previously projected.”