MONTREAL – Dorel Industries Inc. is cutting 50 jobs as it trims costs to address the results of poor weather that has hurt bicycle sales and earnings.
The Montreal-based manufacturer said only “a handful” of the affected positions are in Canada. The positions being cut account for about five per cent of the recreation and leisure segment’s global workforce of 975.
Dorel (TSX:DII.B) said it expects to record a US$2-million severance charge in the second quarter.
Continued poor weather in the U.S., Canada and Europe has hurt bike sales, particularly among independent dealers that sell higher-priced products.
It has also prompted competitors to offer discounts, making the situation worse.
Dorel had expected to make up lost sales but the protracted bad weather means that 2013 bike earnings won’t exceed last year’s levels.
“These issues in bicycles are mainly related to matters beyond our control,” CEO Martin Schwartz said. “Our bicycle products are proven and our brands remain very strong.”
“With the cost reductions being implemented, we are optimistic that bicycle earnings in the second half will increase double digit over last year,” Schwartz added.
Dorel said its juvenile and home furnishings segments are not affected by the weather concerns.
The company will announce its second-quarter results on Aug. 9. It has US$2.5 billion in annual sales and employs 5,400 people in 24 countries.
On the Toronto Stock Exchange, Dorel’s shares slumped 8.7 per cent, or $3.37, to $35.40 on Thursday.