OTTAWA (Reuters) - First-quarter profit at Dorel Industries Inc (DIIb.TO: Quote, Profile, Research) jumped nearly 26 percent on stronger sales of bicycles and children's equipment, but the company cautioned it could be hurt later this year by rising commodity prices and a weak U.S. economy.

Dorel said earnings were $35.1 million, or $1.05 a share, in the period ended March 31, up from $27.9 million, or 85 cents a share, in the same period last year.

That is well above the average analyst estimate of 85 cents a share before exceptions, according to Reuters Estimates.

"Notwithstanding this strong start, it is unclear what the balance of the year will bring due to the weak economy in the U.S. and the current increasing cost environment," Chief Executive Martin Schwartz said in a statement.

High oil prices alongside increases in steel and other metals pose a key challenge, said Dorel.

To offset rising commodity costs, Dorel will increase prices, but said there will be a timing lag. It will also try to improve productivity, control costs and develop new products that improve margins.

The Montreal-based company said quarterly revenue increased 22 percent to $556 million from $455.7 million.

"All divisions showed good improvement," BMO analyst Claude Proulx said in a note. Earnings before interest, tax, depreciation and amortization of $59 million beat his $56.4 million estimate.

Juvenile segment revenue rose 20 percent to $317 million, while recreation and leisure product sales were up 55 percent at $136 million. Home furnishing revenue fell 1 percent to $102 million, reflecting a poor U.S. housing market.