Dorel Industries Inc. Class A · TSX:DII.A
Dorel Industries Inc. Class A — Investor Presentation (October 2015)
126 slides from Dorel Industries Inc. Class A's investor presentation, Oct 28, 2015
Slide 1: Presenters: Jacomin, Reilly and Huang
President & CEO Dorel Juvenile, Jean-Claude Jacomin • Dorel Juvenile: Front runner in the industry • The foundation: collaboration and integration • Organizational blueprint: ongoing efficiencies • Elevated R&D capabilities Chief Operations Officer Dorel Juvenile, Dave Reilly Responsible to drive th
Slide 2: Dorel Juvenile segment overview
Dorel Juvenile segment overview Zhongshan, October 28 2
Slide 3: All over the world
All over the world 3
Slide 4: 4
4
Slide 5: We care for the future generation
We care for the future generation 5
Slide 6: Front runner in the industry
Front runner in the industry 6
Slide 7: Slide 7
Slide 8: Always one step ahead
A Always-one step ahead
Slide 9: Establishing our own division in China
Establishing our own division in China 9
Slide 10: Acquisition of the juvenile business of the Lerado Group
Acquisition of the juvenile business of the Lerado Group o Transaction closing date: 3rd of November 2014 o Scope of acquisition: o Over 4500 employees; o 6 sites o China: Manufacturing, Domestic Sales, R&D o Taiwan: R&D Center 10
Slide 11: Realizing a vertically integrated value chain
Realizing a vertically integrated value chain • Mastering our destiny • Taking control of our supply chain • Opening up the Chinese market • Increasing our global innovation power 11
Slide 12: Dorel Juvenile China
Dorel Juvenile China Strengthening our global leadership, extending our world-leading brands and competitive advantage Global operating Expansion into Elevated R&D capabilities Chinese market capabilities 12
Slide 13: Operations footprint and employee base
- Operations footprint - Employee base (from 3,500 to 7,500) - - R&D center in Taiwan - Presence in the Chinese market 13
Slide 14: Adding Angel as strong local brand
Adding Angel as strong local brand Global brands Regional and local brands 14
Slide 15: Status of organizational integration
Status of organizational integration
Slide 16: Established a skilled leadership team
Established a skilled leadership team George Huang President & CEO Seng Ming Lim Sam Wu Fan Mingfeng, Scott Chen Rick Feener Gary Kao Harrison Cheng VP Operations VP HR & VP Program VP Quality CFO GM Domestic Communications VP R&D management Sales & 3rd Party Sales 16
Slide 17: Building a Dorel Juvenile identity
Building a Dorel Juvenile identity Care for Precious Life 呵护新生命 Visible presence A unified culture: Adapted functional work wear enforcing our identity and visual control Website: Building online presence in China 19
Slide 18: Integrating company cultures
Integrating company cultures Welcoming a new division: celebrations USA celebrating first products shipped from across the world Dorel Juvenile China Dorel Juvenile China competing in Dragon Exchange of knowledge: European employee Boat Race working in Taiwan for dedicated period 20
Slide 19: Informing and engaging employees
Informing and engaging employees 21
Slide 20: Informing and engaging employees
Informing and engaging employees
Slide 21: Implementing global systems and processes
Implementing global systems and processes • Upgrading IT infrastructure and integration into Dorel Juvenile IT eco-system • Dorel Juvenile product costing methodologies implemented • Roadmap for upcoming MRP improvement plan in place. • Along with Internal Audit team, work underway on CSOX internal
Slide 22: Realizing an optimal organization
Realizing an optimal organization lean, smart, and well-equipped 24
Slide 23: Key elements
Key elements A new Senior leadership team Upgraded skillbase under the senior management for a more efficient operation Strong support teams for Finance & IT and HRM Reduction of management layers in Operations Creation of Dorel Juvenile Asia Sourcing team focusing on supplier management
Slide 24: Optimization of the organization: a two-way approach
Optimization of the organization: a two-way approach Indirect Direct Headcount Headcount Reduction Reduction 26
Slide 25: Indirect headcount reduction
1.Indirect headcount reduction • On-going process: Organization Optimization focusing on the indirect headcount • Purpose: 1.Align structures with new business model 2.Reduce costs 3.Revise structures and upgrade skills • Results today: First optimization round done: July and December Result: indire
Slide 26: Direct headcount reduction
2. Direct headcount reduction Drive Consolidation: • Work more efficiently and cost effectively • Reducing the level of complexity Centralizing activities in Zhongshan: • Closing facility in Yangjian – sewing • Closing facility in Fei Long – warehousing MAKE versus BUY: • Closing facility in Guohong
Slide 27: Role and responsibilities
Dave Reilly Role and responsibilities • Operations Strategy Development • Quality assurance and control • Sourcing, Manufacturing and Supply Chain optimization • Logistics and Customer service • Cost Savings initiatives 29
Slide 28: Global operating capabilities
Global operating capabilities Presentation Dave Reilly Chief Operations Officer, Dorel Juvenile
Slide 29: Dorel Juvenile China: strengthening global leadership
Dorel Juvenile China: Strengthening our global leadership, extending our world-leading brands and competitive advantage Global operating Expansion into Elevated R&D capabilities Chinese market capabilities 31
Slide 30: Overall presence of Dorel Juvenile China
Overall presence of Dorel Juvenile China Huangshi Shanghai Zhongshan Chiayi Shenzhen 32
Slide 31: Operations presence of Dorel Juvenile China
Operations presence of Dorel Juvenile China Shanghai Huangshi Zhongshan Chiayi Shenzhen 33
Slide 32: Zhongshan and Huangshi
DOREL JUVENILE Zhongshan and 2 Huangshi @ MAXi-COSI SafetyS’ Quinny’
Slide 33: Production by product category and region
4% 15% 57% Production per Stroller Product Car Seat category Home Equipment (Jan ~ Aug.,2015) Others 24% 5% 1% 2% 8% 63% Production per North America Region 21% Europe (Jan ~ Aug.,2015) Asia South America Oceania Afrida Africa 35
Slide 34: Zhongshan
Zhongshan Assembly -24 assembly lines Sewing - 62 sewing teams Injection molding - 68 injection molding machines Tube cutting, forming & robotic welding, powder coating & liquid painting - 7 robotic welders Fabric cutting - 9 auto - fabric cutters 36
Slide 35: Huangshi
Huangshi Assembly -7 assembly lines Sewing - 9 sewing teams Injection molding - 30 injection molding machines Tube cutting, forming & robotic welding, powder coating & liquid painting - 3 auto-tube cutters - 8 auto tube sealing Fabric cutting 37 - 2 auto - fabric cutters
Slide 36: Strategy
DOREL JUVENILE Strategy
Slide 37: Objectives
Objectives • Consolidate supplier base to reduce complexity and realize cost savings • Drive maturity in the organization via competency assessments and appropriate development • Enhance Quality control and process improvement to raise the level of output • Establish Center of Excellence approach 39
Slide 38: Global operating capabilities
Global operating capabilities Objectives DJC Supplier consolidation Competency Quality controls and Centre of Excellence and leveraging assessment and process improvements approach development 40
Slide 39: Global operating capabilities
Global operating capabilities Objectives DJC Supplier consolidation Competency Quality controls and Centre of Excellence and leveraging assessment and process improvements approach development 41
Slide 40: Supplier consolidation and leveraging
Supplier consolidation and leveraging Factory Supplier base: • Reduced by 25% • Resin, steel, fabric, packaging Savings: • 7.5% to date. Rationalized both small plastic parts and wheels. • Allowing for the consolidation of operations • Selling facility Guohong • Terminating the lease Yangjiang Savin
Slide 41: Global operating capabilities
Global operating capabilities Objectives DJC Supplier consolidation Competency Quality controls and Centre of Excellence and leveraging assessment and process improvements approach development 43
Slide 42: Competency assessment and development
Competency assessment and development • Global procurement team established concentrating on: • Supplier partnerships • Savings programs • Linkage with design groups. • Completed assessment of manufacturing operations concluding in: • Large injection molding and metal forming competence. • Investmen
Slide 43: Global operating capabilities
Global operating capabilities Objectives DJC Supplier consolidation Competency Quality controls and Centre of Excellence and leveraging assessment and process improvements approach development 45
Slide 44: Quality controls and process improvements
Quality controls and process improvements • Improvement of quality levels: • From 54% in January to 93% in September • Acceptance On Deviation (AOD) improved: • from 40% to 1%. • Implementing Kaizen lean techniques: • Setup times reduced from 1.2 hours to 30 minutes. • Cellular progressive manufactu
Slide 45: Working faster and better
Quality Level AOD 100% 45% 90% 40% 80% 35% 70% 30% 60% 25% 50% 20% 40% 15% 30% 20% 10% 10% 5% 0% 0% jan-15 feb-15 mrt-15 apr-15 mei-15 jun-15 jul-15 aug-15 2014 2015 Setup time Working faster and better minutes 80 70 60 50 40 30 20 10 0 2014 2015 47
Slide 46: Quality controls and process improvements
Quality controls and process improvements • Established a tool life database and total productive maintenance system for proactive equipment and tool maintenance. • Converted all manual welding: • 8 robotic welders • steel and aluminum • Individual incentive system now accounts for non-conforming pa
Slide 47: Global operating capabilities
Global operating capabilities Objectives DJC Supplier consolidation Competency Quality controls and Centre of Excellence and leveraging assessment and process improvements approach development 49
Slide 48: Manufacturing Centers of Excellence
Manufacturing Centers of Excellence • Evaluation of manufacturing landscape to integrate the role of Dorel Juvenile China • Selection of Manufacturing Centers of Excellence based on: • Competency / expertise level • Cost effectiveness • Ability to control manufacturability and quality • IP protectio
Slide 49: Global Manufacturing capabilities of Dorel Juvenile
Global Manufacturing capabilities of Dorel Juvenile 51
Slide 50: Key milestones
Key milestones: Moving existing product platforms and launching new platforms Moved existing platforms, NA: • Travel Systems, Play-yards, High Chairs, Walkers • 2 million umbrella strollers New platforms, EU • July: Manufacturing of premium stroller Stella of Maxi- Cosi/Bébé Confort using progressiv
Slide 51: 2016
2016 53
Slide 52: Manufacturing Centers of Excellence for strollers
1. Manufacturing Centers of Excellence for strollers in Zhongshan, Huangshi (umbrellas), and Portugal 54
Slide 53: Car seats Centers of Excellence
2. Car seats Centers of Excellence in Columbus, Portugal, Helmond, Zhongshan and Brazil 55
Slide 54: Transform Dorel Juvenile China's operations into a lean organization
3. Transform Dorel Juvenile China’s operations into an established and lean organization • Rationalize injection molding (wheels, small parts) • Improve capacity and capability • Establish good balance of insourcing and outsourcing • Operate with high quality systems, labs, and testing • Commit to 9
Slide 55: Realize solid global processes and ownership
4. Realize solid global processes and ownership • Align business strategy with operations processes: Improve control and consistency Improve operational efficiencies Reduce redundancies Improve overall communication Processes| S&OP |Supply Chain | Customer Satisfaction | Manufacturing | Oper
Slide 56: Role and responsibilities
George Huang Role and responsibilities • Implement overall strategy and annual business plans • Accomplish a successful integration of the Chinese organization into Dorel Juvenile • Constantly drive a rapidly increasing domestic business growth • Transform Dorel Juvenile China into a viable market o
Slide 57: Unlocking the potential of the Chinese market
Unlocking the potential of the Chinese market Presentation George Huang President & CEO, Dorel Juvenile China
Slide 58: Dorel Juvenile China: strengthening global leadership
Dorel Juvenile China: Strengthening our global leadership, extending our world-leading brands and competitive advantage Global operating Expansion into Elevated R&D capabilities Chinese market capabilities
Slide 59: Strategy
DOREL JUVENILE Strategy
Slide 60: Expansion into Chinese market focus points
Expansion into Chinese market 2 focus points Growing domestic Shifting non-Dorel market Sales Juvenile sales to private label business 62
Slide 61: Growing domestic market sales
Growing domestic Shifting non-Dorel market Sales Juvenile sales to private label business 63
Slide 62: Market analysis
Market analysis 64
Slide 63: Overview of the World Economic Outlook projections
Source: IMF Overview of the World Economic Outlook projections (percent change unless noted otherwise)
Slide 64: Economic indicators for China
Economic indicators for China 66
Slide 65: Stroller & Car Seat Market in China
Stroller & Car Seat Market in China Total Retailing Sales of Stroller & Car Seats in China: • 2014: US$ 1.8 Billion • Estimation 2018: US$ 3.3 Billion • The sales of billing from the brands in 2014: US$ 862 Million 3.3 2.08 1.8 1.5 1.2 1.0 0.82 2010 2011 2012 2013 2014 2015 2018 Unit：Billion USD Sou
Slide 66: New Borns
New Borns • The number of new born babies developed rapidly Millions New borns 16,5 16,4 16,3 16,2 16,1 16 15,9 15,8 15,7 2008 2009 2010 2011 2012 2013 Source: National Bureau of Statistics of PROC 68
Slide 67: Competitive landscape
Competitive landscape • Strollers: +/- 160 brands • Car seats: +/- 90 brands Premium HPP MPP OPP+ OPP 69
Slide 68: China market channel overview
China market channel overview Brand Owner Importer National Agents In-house Sales Team Area/Provincial Distributor Department KA Specialty Baby Shop Wholesale Store Hypermarket Store (36%) (5%) (16%) (20%) (12%) E-Commerce(11%) Consumer 70
Slide 69: Key Account Hypermarket
Key Account Hypermarket 71
Slide 70: Baby Shop
DOREL JUVENILE Baby Shop pe _ _
Slide 71: Specific E-commerce channel China
Specific E-commerce channel China Tmall.com • Tmall.com is a Chinese-language website for (B2C) online retail. • A platform for local Chinese and international businesses to sell brand name goods to consumers in mainland China. • It allows foreign brands to enjoy the Chinese market without having an
Slide 72: Key success factors
Key success factors Brand awareness, company image & reputation Channel coverage & relationship with channels Product innovation & fashion design Logistics & after-sales services Product quality, 3C compliance & guarantee China local manufacturing 74
Slide 73: Objectives
Objectives • To realize a sustainable growth • To offer a brand portfolio with a full range of products • To lead the way in the market by offering omni- channel solutions 75
Slide 74: Overview Strategic Implementation
Overview Strategic Implementation 1. To realize a sustainable growth • Scale down unprofitable KA Hypermarket • Have closed own stores • Introduce new car seats, strollers and small furniture • Gain market share via Pincer Attack strategy 2. To offer a brand portfolio with a full range of products •
Slide 75: Overview Strategic Implementation
Overview Strategic Implementation 3. To lead the way in the market by offering omni-channel solutions • Focus on Baby Shops and e-commerce channel. • Grow online sales • Develop new channels • Set up partnership program for the O-to-O (On-line& Off-line) strategy 77
Slide 76: Objective
Objective • To realize a sustainable growth • To offer a brand portfolio with a full range of products • To lead the way in the market by offering omni- channel solutions 78
Slide 77: Dorel Juvenile China – Price point & Channel overview
Dorel Juvenile China – Price point & Channel overview Department stores National baby chain stores Premium Regional baby chain stores HPP Community baby chain stores MPP Wholesale market in major market OPP+ Hypermarkets Wholesale market OPP In minor market 79
Slide 78: Pincer Attack Strategy
Quality high Pincer Attack Strategy low Price high • Quinny • Safety 1st -Premium -MPP -Stroller -Whole range • Maxi Cosi • Angel -High-end -OPP+ -Car Seat & Stroller -Whole range • Bébé Confort OPP -High-end Local brand -Feeding & Home Equipment low 80
Slide 79: Objective
Objective • To realize a sustainable growth • To offer a brand portfolio with a full range of products • To lead the way in the market by offering omni- channel solutions 81
Slide 80: Brand and product strategy
Brand and product strategy
Slide 81: Brand portfolio strategy
DOREL JUVENILE Brand portfolio strategy Angel’ | safety® Qavv bébéconfort J) KRvv Y Quinny’ Y vv Y
Slide 82: Shanghai CBME Fair: Introducing Bébé Confort & Safety 1st
Shanghai CBME Fair Introducing, Bébé Confort, & Safety 1st Expanding Quinny, Maxi-Cosi 84
Slide 83: Shanghai CBME Fair: Re-positioning Angel
Shanghai CBME Fair Re-positioning Angel 85
Slide 84: Car seats
Car seats • Chinese consumers buy one car seat for their child from 1 year to 6 years old. • Maxi-Cosi and Safety 1st are set-up to serve these consumers with convertible/ multi-group car seat solutions • The various product launches are therefore aimed at convertible solutions 86
Slide 85: Convertible solutions
Convertible solutions • Launched in 2015 (Maxi-Cosi): • the Group 0+ /1 and Group 0+/1/2 MiloFix and Opal MiloFiX Opal • Launched in 2015 (Safety 1st) • Group 0+/1, Group 0+/1/2 Simply Safe Simply Safe 87
Slide 86: Broad range of stroller portfolio
Broad range of stroller portfolio For the affluent consumers of China: From affordable Angel, to Safety 1st, Max-Cosi, and premium Quinny: 88
Slide 87: Adding Angel as strong local brand
Adding Angel as strong local brand Global brands Regional and local brands 89
Slide 88: Where there are children, there is Angel
'Where there are children, there is Angel'. • A diverse range of affordable juvenile products in line with the needs of Chinese parents. • Product categories: • strollers and home equipment • 2016: Introducing car seats • Reinforcing Angel by leveraging global capacities of other Dorel Juvenile bran
Slide 89: Re-positioning strollers
Re-positioning strollers 3 key stroller categories in China: Handle reversible | Car seat reversible |Buggy 91
Slide 90: Objective
Objective • To realize a sustainable growth • To offer a brand portfolio with a full range of products • To lead the way in the market by offering omni-channel solutions 92
Slide 91: Omni-channel strategy
Omni- channel strategy 93
Slide 92: Channel strategy
Channel strategy • Focusing on realizing growth in baby stores and online sales (tmall.com) • Scale down unprofitable KA hypermarket stores and department stores • Closed 5KA channels, and 600 stores • Closed owned stores and shop-in-shop stores • Reaching generation Y parents • Focus on social netw
Slide 93: Market Channel Strategy
Market Channel Strategy Brand Owner Importer National Agents In-house Sales Team Area/Provincial Distributor Department KA Specialty Focus Baby Shop Store Hypermarket Wholesale Store (36%) (5%) (16%) (20%) (12%) Focus E-Commerce(11%) Consumer 95
Slide 94: Channel development
Channel development Number of stores % of Net Sales 50% 1400 45% 1200 40% 1000 35% 30% 800 25% 2015 600 2016 20% 400 15% 10% 200 5% 0 0% Baby Chain store Baby Shop (Wholesalers) KA Hypermarket Specialist Mass Market Distributor Retail Online Sales 2015 2016 96
Slide 95: Online approach
Online approach 97
Slide 96: Specific Chinese Channels: WeChat
Specific Chinese Channels: WeChat – free messaging and call app • Supports different ways of instant message • Supports users to register as a public account, which enables them to interact with subscribers and provide them with service. • Public accounts have become a common service or promotion pl
Slide 97: Specific Chinese Channels: Weibo
Specific Chinese Channels: Weibo- microblogging platform • Weibo" (微博) is the Chinese word for "microblog“ and is increasingly being used in China • Similar functionalities to Twitter, using 140 (Chinese) characters • Western companies are utilizing Weibo to gain access to the Chinese market 99
Slide 98: Online Marketing 2016
Online Marketing 2016 • Quinny, Maxi Cosi, SF1, & BBC Weibo & WeChat • 4 Websites & Translation • Weibo/ Wechat communication • Angel • Redesign Angel website & Photography • Weibo/ Wechat communication • Tmall flagship stores for all brands 100
Slide 99: Specific marketing approach China: online micro-movies
Specific marketing approach China: Online micro-movies • Micro movies have become increasingly popular • In China’s vast metropolises long commute times mean millions spend hours watching content on their smartphones • Micro-movies are shot over a short period of time, last from three to thirty minu
Slide 100: Including micro-movie in marketing
Dorel Juvenile China: Including micro-movie in marketing • Develop a series of micro-movies to promote online and offline sales • Include consumers in defining the narrative of the story • Introduce brand and products • Engage with consumers via local marketing forum and WeChat • Use of well-known b
Slide 101: Micro-movie: an extensive online interlinked approach
Micro-movie: An extensive online interlinked approach Embedded Micro Movie • Embedded core product features by using attractive story. Mini-Site • Elaborate product information: interaction with consumers • Engage fans to Key Opinion Leader WOM Marketing • Make some “noise”: talking receive attentio
Slide 102: Shifting non-Dorel Juvenile sales to private label
Growing domestic Shifting non-Dorel market Sales Juvenile sales to private label business 104
Slide 103: Non-Dorel Juvenile sales
Non-Dorel Juvenile sales Business Strategy • Harvest Strategy for market competitors - Maximizing the profit and cash in-flow • Strengthen the business development of the private label business of retailers 105
Slide 104: Retailer Model Carrefour
Retailer Model Picture Carrefour HA1360 Carrefour FA0050 Carrefour RA2041 Carrefour WA1240 Carrefour EB3950 106
Slide 105: Elevated R&D capabilities
DOREL JUVENILE Elevated R&D capabilities
Slide 106: Strengthening our global leadership
Strengthening our global leadership, extending our world-leading brands and competitive advantage Global operating Expansion into Elevated R&D capabilities Chinese market capabilities 108
Slide 107: Consolidate global R&D footprint
Consolidate global R&D footprint To drive innovation & synergies 4 Global R&D centers of excellence
Slide 108: Consolidate global R&D footprint
Consolidate global R&D footprint To drive innovation & synergies • Focused innovation to support strategic Brands & categories • Car Seats and technology • Maxi-Cosi & Quinny Mobility • Safety 1st Home Safety & Infant Health • Tiny Love developmental play • Clear roles for our development centers •
Slide 109: Asia R&D
Asia R&D Key development center to support stroller expertise & regional consumer needs • Global Engineering excellence for Strollers and Home Equipment • Global OPP/PL Design to Manufacturing for all brands • Regional development for China /South East Asia markets
Slide 110: R&D capabilities
R&D capabilities • Dynamic Crash Test Lab for CRS • In-house test facilities for Strollers and Home, raw materials • In-house measurement and dynamic test facilities
Slide 111: Europe R&D
Europe R&D Leverage strong expertise • Global design development for Maxi-Cosi and Quinny mobility solutions • Global Advanced Car Safety Solutions Research & technology expertise Automotive and biomechanics 113
Slide 112: USA R&D
USA R&D Leverage strong expertise • Global design development for Safety 1st • Global development for Home Safety and Infant Health , Connected Home solutions • Regional developments supporting NA consumer needs and customer requirements
Slide 113: Tiny Love: Center of Excellence for development play
Tiny Love: Center of Excellence for development play • Global Tiny Love design and advanced concept developments • Digital play and connected solutions 115
Slide 114: Global Strategy
DOREL JUVENILE Global Strategy © MAXI-COSI Safety Quinny’
Slide 115: We took control of our global leadership position
We took control of our global leadership position, and now have the ability to design our leadership for the future 117
Slide 116: Focus 2016-2018
Focus 2016-2018 118
Slide 117: Grow our global leadership
1. Grow our global leadership Omni-channel solutions: New markets 119
Slide 118: Deliver 5-star products
2. Deliver 5-star products Global NPD centers Use of consumer insights 120
Slide 119: Reduce brand & category complexity
Profitable brands & categories 3. Reduce brand & category complexity Rationalization product platforms 121
Slide 120: Consumers know our brands, buy our brands
Best-in -class digital capabilities 4. Consumers know our brands, buy our brands Increasing marketing investment 122
Slide 121: Achieve synergies & cost savings
Simpler organization 5. Achieve synergies & cost savings Optimal use of our operations 123
Slide 122: World-class organization capable of transformation
Employee accountability 6. World-class organization capable of transformation Change management capabilities 124
Slide 123: Transformation
DOREL JUVENILE Transformation
Slide 124: One journey. Worldwide. Team up to Transform.
One journey. Worldwide. Team up to Transform. 126
Slide 125: Dorel Juvenile: Care for Precious Life
DOREL JUVENILE Care for Precious Life
Slide 126: Dorel Juvenile: Care for Precious Life
DOREL JUVENILE Care for Precious Life é (MAXI-COSI’ Safety tist) Quinny’ Tiny ove]
Dorel Industries — Investor Presentation (October 2015) on 6ix