Dorel pushes into heart of central Europe with Polish purchase

MONTREAL – Canadian bike and baby gear manufacturer Dorel Industries Inc. is dipping further into retailing by buying a children’s product distributor and seller in Poland. The country’s economy has rebounded after the fall of communism to become one of Europe’s brightest and it may avoid the steep slowdown threatening the rest of the continent.

Dorel said Thursday it has bought Poltrade, a company based in the southern Poland city of Katowice that has been distributing its products in the country for 15 years. No purchase price was disclosed.

Poltrade has a leading position in the Polish car seat safety market and operates three retail outlets. The company expects to ring in sales this year of about 7.5-million euros ($9.8-million). With the purchase, Dorel pushes further afield internationally into growing markets to offset weakness for its infant products in North America. And it also boosts its retailing presence.

Last month, Dorel concluded a deal to buy a controlling stake in Silfa, a group of companies that owns South America’s most popular infant product brand. That transaction, which includes an interest in the Baby Infanti chain of 52 specialty shops, launched the company into retailing. Until December it had only manufactured products.

“[This new deal] is another tangible example of our strategy to grow in markets outside North America,” Dorel Juvenile Group President Hani Basile said in a statement. “In view of the opportunities we see in this region, the integration with Dorel will give the Polish team additional means to extend both brand and product category penetration in this key market of Central Europe.”

Poltrade was established in 1991, the same year in which Poland’s economy last contracted.

The country is the only EU nation to have avoided a recession in the past 20 years. The trend line could extend into 2012 as the rest of the continent slides into a downturn punctuated by its sovereign debt crisis.

Jacek Rostowski, Poland’s finance minister, told Newsweek magazine in a story published this week that Poland’s economy can grow at a rate of 3% to 4% even if the eurozone has a “lost decade” of zero growth, as long as the currency bloc doesn’t fall apart.

European Union treaties need to be changed to let the European Central Bank buy bonds of fiscally-responsible EU members who can’t finance debt because of financial market contagion, Mr. Rotowski said.

“The truth about this crisis is that Italy, Spain, France and Germany are all solvent at 3% yields, while none of them – not even Germany – is solvent at 8%,” Newsweek quoted the finance minister as saying.

Over the last two decades, Poland has more than tripled its GDP per capita in current dollar terms – from US$5,612 to US$18,800 as of 2010. The country’s exporters are gaining market share, partly as a result of keeping labour costs in check.

Montreal-based Dorel makes baby products under the names Maxi-Cosi and Safety 1st among others. In November, it reported third quarter net income of US$23.1-million or 71¢ per share, down 24.5% from the same quarter a year earlier, citing waning demand in the United States for baby gear.

Dorel shares fell 0.5% to $25.50 in early afternoon trading Thursday on the Toronto Stock Exchange, off 26% from their 52-week high.

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