Schwinn-parent Dorel stops paying dividend, as tariffs have caused 'chaotic' market conditions

Canada News News

Dorel Industries Inc. said Tuesday it will stop paying a dividend, citing the impact of increased U.S. tariffs and following a review of preliminary third-quarter results. The Canada-based juvenile products and bicycle maker, which brands include Schwinn, Cannondale and Maxi-Cosi, said the dividend being paid on Oct. 2 is not affected. Dorel's previous quarterly dividend was 15 cents a share, with the annual dividend rate of 60 cents a share implying a dividend yield of 8.82% on the U.S.-listed shares. The company said the increase in May on tariffs on Chinese imports to 25% is having a "much greater impact" on its business than the previous 10% tariff. "We raised prices midway through the third quarter and this has had several negative consequences," said Chief Executive Martin Schwartz. "It is prudent to suspend the dividend until the chaotic market conditions created by tariffs are normalized." As a result, Schwartz said the expected gross margin improvement will be delayed until the beginning of 2020. The U.S.-listed stock has tumbled 47.4% year to date, while the S&P 500 has gained 18.7%.