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Dorel and its Cycling Sports Group Reports Loss for 2016

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MONTREAL, Canada – Dorel Industries Inc. today announced its results for 2016 which showed a 3.0% drop in revenues to USD 2.60 billion (€ 2.5bn). This resulted in a net loss of USD 11.6 million (€ 10.9mn). The division Dorel Sports, including Cycling Sports Group, turned out to be bleeding.

Dorel and its Cycling Sports Group Reports Loss for 2016
Dorel Sports, including Cycling Sports Group, turned out to be bleeding due to an operating profit loss of close to USD 34 million. – Photo Bike Europe

Next to the Dorel Sports division Dorel Industries also includes Home and Juvenile divisions. Dorel Sports saw its revenues drop by 6.1% creating an operating profit loss of close to USD 34 million (€ 32mn) which is down big from an operating profit of USD 11 million (€ 10.4mn) in 2015.

Today’s press release says on Dorel Sports’ turn to loss-making “The main causes were the change in US dealers’ purchasing patterns, industry-wide discounting due to excess inventories at suppliers and retailers during the first half of 2016 and a generally soft global bike market overall.”

‘Reduced margins from discounting’

On Dorel Sports’ results the press release continues with “Full year revenue declined 6.1% to USD 939.0 million (€ 885mn). Year-to-date operating loss was USD 33.9 million (€ 32mn) compared to an operating profit of USD 10.9 million (€ 10.3mn) in 2015. Excluding impairment losses, restructuring and other costs, adjusted operating profit declined USD 10.5 million (9.9mn), or 24.9% to USD 31.5 million (€ 29.7mn) mainly from lower demand and reduced margins from discounting during the first half of 2016. Pacific Cycle had a good year, in part, due to improved supply chain efficiencies. Strategic pricing, cost controls as well as a better product mix allowed Caloi to increase its profitability.”

Outlook

On Dorel Sports outlook for this year Martin Schwartz, Dorel President and CEO says “Dorel Sports worked throughout 2016 to position itself for a rebound in earnings in 2017. Excess inventories in the industry have been reduced and thus rampant discounting should not be repeated. Improvements made in cost control and supply chain management are expected to contribute to the operating profit, helping to offset any sales softness, should this occur. It is early in the year and visibility for the full year is difficult, but we are confident in the direction of the segment.”

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