(Reuters) - Dorel Industries Inc (DIIb.TO), which makes bicycles and children’s products, reported second-quarter results that came in way below expectations as wet weather dampened bike sales and growth in the kids’ business slowed.
Dorel shares fell as much as 15 percent to C$31.20 in early trading on the Toronto Stock Exchange.
The company, which also makes home furnishings, said it expects earnings from the children’s business to be flat for the year.
Dorel warned in June that earnings from its recreational unit would be weaker than expected as wet weather had hurt bicycle sales in the United States, Canada and Europe.
The company’s net income in the quarter ended June 30 fell more than 56 percent to $13.2 million, or 41 cents per share, below the average analyst expectation of 82 cents per share.
Total revenue fell 5 percent to $600.5 million. It missed analysts’ average expectation of $636.4 million, according to Thomson Reuters I/B/E/S.
Sales at the juvenile unit fell 4 percent to $243.4 million. The company makes car seats, strollers, high chairs and toddler beds. Its juvenile brands include Safety 1st, Quinny, Maxi-Cosi and Bébé Confort.
Revenue at the recreational and leisure unit, which makes bicycles and jogging strollers, was down 5 percent.
The company said margins were dented as it had to offer more discounts due to higher bicycle inventories.
Dorel, which earlier cut about 5 percent of the recreational unit’s workforce, said it took a one-time charge of about $2.0 million related to the severance.
Shares of the Montreal-based company were down 10 percent at C$33.01 in afternoon trading.
Reporting by Bhaswati Mukhopadhyay in Bangalore