MONTREAL, Canada – Dorel Industries Inc. announced its fourth quarter and year-end earnings last week. The company’s bicycle business with brands like Cannondale, Schwinn, GT, Mongoose, IronHorse, and Sugoi continues to be a profitable division.
Dorel CEO and president Martin Schwartz notes; “Dorel’s bicycle business had another very strong year, significantly improving on 2010’s positive results. We are confident this is sustainable and that the Recreational/Leisure segment will continue to deliver growth.”
Dorel's overall revenue rose 4,1%
The Canadian-based company saw overall revenue rise 4.1% in the fourth quarter to US$ 561.6 million, compared to US$539.5 million a year ago. Net income rose 5.5% to US$27.4 million. Dorel’s total revenue for 2011 was US$2.4 billion, a 2.2% increase compared to the US$2.3 billion generated in 2010 while net income decreased 18.1% to US$104.6 million.
For the Recreational/Leisure segment which includes the company’s bicycle business Dorel reported fourth quarter revenue of US$202,410,000 – down 1.7% compared to 2010 (US$205,892,000). Gross profit for the quarter was US$46,410,000 or 22.9% of revenue, while operating profit for the quarter was US$11,604,000 (5.7%).
11,7% increase over 2010
In 2011, Dorel’s total revenue for the Recreational/Leisure segment was US$861,754,000, 11.2% higher than 2010. Gross profits for the year totaled US$205,052,000 (23.8% of revenue), an 11.7% increase over 2010. Operating profits were US$60,657,000, a 17% gain over last year.
The relatively flat fourth quarter is being partly attributed to a shift in orders from the fourth quarter to the third quarter of 2011. However, despite a revenue decline, operating profits for the quarter increased by US$1.0 million, thanks in part to savings realized by not repeating a fourth quarter promotional campaign that ran in 2010.
25% sales improvement in IBD distribution channels
The 11.2% increase in revenues for the year came mainly from a 25% sales improvement in IBD distribution channels; growth the company credits to new products being well received in the marketplace. Cycling Sports Group’s sales were up in all markets, with most of the growth coming from outside North America. Pacific Cycle, which sells bikes to retailers such as big box and department stores, saw little change in sales from 2010.
While sales and marketing expenses increased in 2011, both selling and general and administrative expenses declined in 2011 by a combined 30 basis points. Dorel’s troubled Sugoi apparel division however, continued to negatively impact the balance sheet, writing down excess inventory from previous years, and spending US$1.8 million as part of a strategic decision to outsource its "custom manufacturing" business to a third party.
Dorel management not happy with financial performance
While positive results, Dorel management isn’t completely happy with this year’s financial performance. “By most measures 2011 was not an acceptable year for Dorel”, said Schwartz. “While others may have cut back to help short-term earnings at the expense of long term gain, we did not. We were able to focus on long-term objectives and expanded our global reach, improved our products and supported our brands. We were also able to generate good cash flow, allowing us to make these investments. This long term vision will help us in 2012 and we anticipate improved earnings from our operations.”