Dorel Delivers Impressive 2nd Quarter
Despite a challenging marketplace, fluctuating exchange rates, and a shortage of containers Dorel Industries posted strong results for the second quarter of 2010, with revenue growth of almost 10%. Combined with the companys first quarter results Dorel CEO Martin Schwartz (photo) was able to announce the companys best-ever first half of the year.
MONTREAL, Canada – Despite a challenging marketplace, fluctuating exchange rates, and a shortage of containers Dorel Industries posted strong results for the second quarter of 2010, with revenue growth of almost 10%. Combined with the company’s first quarter results Dorel CEO Martin Schwartz (photo) was able to announce the company’s best-ever first half of the year.
Total revenue for the second quarter rose 10.3% to US$ 607.7 million from US$ 551.1 million for the same quarter a year ago. Net income rose also, to US$ 35.1 million or US$ 1.05 per diluted share, compared with the 2009 second quarter figures of US$ 24.8 million or US$ 0.74 per diluted share.
In a company press release, President and CEO Martin Schwartz pointed to Dorel’s bike divisions as a big part of the positive results, saying, “We are seeing the benefits of the on-going investments in our bicycle business through improved product development, solidifying our structure and promoting our brands. Our brands are gaining wider acceptance and our bicycles are more in demand.”
In a conference call to discuss the second quarter results Schwartz mentioned Cannondale specifically as one of the bike brands in Dorel’s Cycling Sports Group enjoying considerable success. According to Schwartz, successes on the pro tour, positive reviews in cycling magazines and strong growth in the UK and Japan were all factors in the brand’s popularity with consumers, especially for elite level racing bikes such as the Cannondale SuperSix.
A multi-million dollar marketing campaign for Schwinn is also delivering increased market share, while Schwartz says that many of the IBDs carrying Cannondale bikes are also now carrying other brands from the Cycling Sports Group’s line-up, such as GT.
The company’s decision to create an Asia-Pacific division of the Cycling Sports Group is also paying dividends, particularly in Japan where strong demand for urban bikes is fuelling an increase in orders.
For just the Recreational/Leisure division (including CSG) Dorel’s revenue increased 7.9% to US$ 214.9 million (an increase of US$ 15.8 million). Year to date revenues are up 10% (US$ 36 million) to US$ 396.6 million. Schwartz pointed out that the results could have been even better, but they had to deal with a shortage of ocean shipping containers and couldn’t ship enough product to their dealers to meet demand.
In addition, exchange rate fluctuations with the Euro, and higher input costs also affected the bottom line for the company. For the final half of the year, the company’s growth is expected to slow somewhat, due to increasing commodity and freight costs, but revenue totals in excess of last year for the same time period are still expected.