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INVESTOR PRESENTATION FOURTH QUARTER Ended December 30, 2013

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Page 1: I N V E S TO R P R E S E N TAT I O N F O U R T H Q UA R T ... · PDF fileCannondale, Schwinn, Mongoose ... •Including Tiny Love, but excluding one-time costs of US car seat case,

I N V E S T O R P R E S E N TA T I O NF O U R T H Q U A R T E R

E n d e d D e c e m b e r 3 0 , 2 0 1 3

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Forward-Looking Statement

Except for historical information provided herein, this presentation may contain information andstatements of a forward-looking nature concerning the future performance of Dorel IndustriesInc. These statements are based on suppositions and uncertainties as well as on management'sbest possible evaluation of future events. The business of the Company and these forward-looking statements are subject to a number of risks and uncertainties that could cause actualresults to differ from expected results. Important factors which could cause such differences mayinclude, without excluding other considerations, increases in raw material costs, particularly forkey input factors such as particle board and resins; increases in ocean freight container costs; thecontinued ability to develop product and support brand names; changes to the Company’seffective income tax rate as a result of changes in the anticipated geographic mix of revenues; theimpact of price pressures exerted by competitors, and settlements for product liability caseswhich exceed the Company’s insurance coverage limits. A description of the above mentioneditems and certain additional risk factors are discussed in the Company’s Annual MD&A andAnnual Information Form, filed with the Canadian securities regulatory authorities. The riskfactors outlined in the previously mentioned documents are specifically incorporated herein byreference. The Company’s business, financial condition, or operating results could be materiallyadversely affected if any of these risks and uncertainties were to materialize. Given these risksand uncertainties, investors should not place undue reliance on forward-looking statements as aprediction of actual results.

Note: All figures are in US dollars.

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Dorel Overview

• 3 major segments

• Juvenile products (2013 revenue - $993 million)

• Bicycles/recreational products (2013 revenue - $919 million)

• Home furnishings (2013 revenue - $524 million)

• $2.4 billion in sales annually

• Approximately 6,400 employees

• Sales to 100+ countries

• Facilities located in 25 countries

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Dorel’s Key Brands

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Fourth Quarters Ended December 30Consolidated

(in thousands, other than EPS) 2013 2012

Total revenue $ 633,534 $ 622,604

Net income $ 11,024 $ 29,119

EPS (diluted) $ 0.34 $ 0.91

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Juvenile Segment

Fourth Quarters Ended December 30

(in thousands) 2013 2012

Total revenue $ 255,254 $ 267,359

Gross profit $ 73,445 $ 74,820

Operating profit $ 18,388 $ 18,641

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Fourth QuarterJuvenile Highlights

• Organic revenue decreased by approximately 4% year-over-year and increased almost 7% versus the third quarter of 2013

• Most of segment’s markets’ currencies weakened against USD, with the exception of the Euro

• Despite 4.5% reduction in revenue, operating profit was similar

• Year-end store count in Chile/Peru was 88, an increase of 18 from prior year

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Innovation - Dorel Juvenile USA

• Incorporates new G-cell HX Superior Side Impact technologydeveloped at Dorel Technical Center with specialists in race car cockpit crash protection with Air Protect® - side impact technology

• 3 in 1 car seat for 3 modes of use – infant, convertible and booster

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Newest North American car seat platform – Elite 80 Air + by Saftey 1st

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A World Leader in Juvenile

Dorel Juvenile Europe

• Leading juvenile products

• Maxi-Cosi/ Bébé Confort/Quinny car seats and strollers remain the leading European signature brands to premium price point market

• Extensive local product development

• E-tailing market expansion

• Extensive new products launched at September Cologne, Germany juvenile show

• Maxi-Cosi 2way Pearl i-size car seat wins show’s Innovation Award in World of Travelling Baby category

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Innovation – Dorel Juvenile Europe

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Kind + Jugend Innovation Award 2013

• Dorel Juvenile is the first car seat manufacturer to offer a child restraint system which adheres to the new i-Size European standard for increased child safety

• The 2Way Pearl, a convertible (front and rear facing) car seat marketed under Dorel’s Maxi-Cosi and Bébé Confort brands

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Innovation – Dorel Juvenile Europe

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Loola by Maxi-Cosi & Bébé Confort

• Total flexibility and mobility: parents and caregivers can clip a carrycot or a group 0+ car seat

• A versatile light-weight stroller sold throughout Europe

Natural Comfort Bottle

• Easily accepted by baby : developed with experts, tested and approved by consumers – BPA Free

• The first eco-designed baby bottle on the market

• Made in France, with -20% plastic in it

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Recreational/Leisure Segment

Fourth Quarters Ended December 30

(in thousands) 2013 2012

Total revenue $ 245,465 $ 226,640

Gross profit $ 51,861 $ 56,519

Operating profit (loss) $ (5,427) $ 16,456

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Fourth QuarterRecreational/Leisure Highlights

•Revenue increased by 8.3%, organic sales up 1%

• Sales affected by global bike market slowdown, sluggish start to holiday season in IBD and mass channels, industry discounting

• $13.5 million pre-tax restructuring charges resulted in $5.4 million operating loss

• Excluding restructuring charges, operating profit was $8.1 million

• Caloi contributed a full quarter of profitability

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Recreational/Leisure Segment

Three distinct operating divisions

1) Cycling Sports Group (CSG)

• IBD Division

• Premium Brands

• Growing dealer network

• CSG sales growing rapidly outsideNorth America

• Innovation – continuing focus

• Building Dorel’s bike business to # 1 position

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Recreational/Leisure Segment

2) Pacific Cycle

• Mass merchants/sporting goods chains

• Bicycle parts/accessories

• Full service provider – bikes, parts and accessories,branded apparel

• Brand building has enhanced Schwinn’sawareness

• 2013 marketing to strengthen Schwinn and Mongoose brands

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Caloi Acquisition• Established in 1898. Largest bicycle brand in Latin America. 900

employees

• Acquired 70% interest, Caloi CEO now President of segment’s Brazil operations

• Products are distributed across Brazil through a variety of channels, from mass market to IBD

• Factory in Manaus is largest bicycle plant outside South East Asia

• Brazil now a production hub for Dorel. Factory assembling Cannondale, Schwinn, Mongoose and GT to serve Brazilian and export markets

• Manaus expected 2014 production – 820,000 units

Recreational/Leisure Segment

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Recreational/Leisure Segment

3) Apparel Footwear Group (AFG)

• Performance apparel division incorporates strong SUGOI brand

• New branding opportunities include Technical Sponsor for Cannondale Pro Cycling Team and partnership with Ironman triathlons

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Home Furnishings Segment

Fourth Quarters Ended December 30

(in thousands) 2013 2012

Total revenue $ 132,815 $ 128,605

Gross profit $ 15,451 $ 15,064

Operating profit $ 5,004 $ 7,295

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Fourth QuarterHome Furnishings Highlights

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•Revenue increased by 3.3%. Operating profit was down $2.3 million or 31.4% mainly due to product liability costs

• Sales increase driven by strong performances at DHP and Cosco Home and Office

• Internet Sales continued to grow and now represents a significant portion of revenue – just over 20% of sales

•Drop-ship vendor program also continuing to gain traction

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Outlook

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• Encouraging start to year• Restructuring and cost-cutting initiatives, barring weather issues, expected to result in

higher profits• Q1 earnings should improve at least 20-25% over last year

Recreational/Leisure

Juvenile

• Expect most markets to improve their earnings through 2014

• Including Tiny Love, but excluding one-time costs of US car seat case, earnings for year should grow at least 10% for the year

• Currency challenges in Canada, Australia and Latin America

Home Furnishings

• Expect moderate growth in sales/earnings

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Why Invest in Dorel

• A record of successfully integrated acquisitions

• A focus on Juvenile and bicycles where Dorel is a key player

• Strategically growing Juvenile and Recreational/Leisure in Latin America

• A portfolio of known, premium brands

• Product development capabilities that drive growth

• Established customer relationships

• Strong annual dividend of $1.20 per share

• Consistent generator of cash flow to support acquisitions

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APPENDIX

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Financial Performance – 5 Years (In thousands, except per share amounts)

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Growth Through Acquisitions

• 1988 Cosco Inc (DJG)

• 1990 Charleswood Corporation

• 1994 Maxi-Miliaan B.V. (Maxi-Cosi)

• 1998 Ameriwood Industries

• 2000 Safety 1st Inc.

• 2001 Quint B.V. (Quinny)

• 2003 Ampa France (Dorel Europe)

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Growth Through Acquisitions

• 2004 Pacific Cycle

• 2007 IGC Australia

• 2008 Cannondale/SUGOI

• 2008 PTI Sports

• 2009 Baby Art

• 2009 Dorel Brazil - 70% interest

• 2009 Iron Horse Bicycles

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Growth Through Acquisitions

• 2009 Gemini Bicycles (Australia)

• 2009 Hot Wheels, Circle Bikes (UK)

• 2011 Silfa Group (Chile, Peru, Bolivia, Argentina) - 70% interest

• 2012 Poltrade (Poland)

• 2012 Best Brands Group SA (Panama) and Baby Universe SAS (Colombia) – 70% interest

• 2013 Caloi (Brazil) – 70% interest

• 2013 Cannondale Pro Cycling and Brixia Sports – majority interest

• 2014 Tiny Love Ltd.

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Total Revenue by Segment

42%

37%

21%

JUVENILE RECREATIONAL/LEISURE HOME FURNISHINGS

2013 2012

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41%

38%

21%

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Geographical Distribution of Total Revenue (by customer)

2013 2012

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56%

6%

24%

6%8%

US Canada Europe Other Latin America

58%

6%

25%

11%

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Sustainability Philosophy

• Active in sustainability on several fronts throughout all three segments

• Dorel Home Products facility is FSC certified

• Cornwall RTA plant recycling for 10 years

• 98% of materials are recycled or sold

• DJG’s sustainability initiatives include zero landfill, water usage reduced by 98%; high-efficiency lighting systems

• Strict policy in place to ensure sustainable business practices of suppliers

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