Dorel Sports Sees Sales Improving in Second Quarter
MONTREAL, Canada – Dorel Sports including Cycling Sports Group (Cannondale, GT, Mongoose among other brands as well as Pacific Cycle and Caloi) had a much better quarter than anticipated, surpassing earlier published expectations. Second quarter revenue increased USD 15.5 million, or 7.4%, to USD 224.5 million. With that six month revenue increased USD 8.1m, or 1.9%, to USD 431.2m which is flat to prior year after removing the impact of varying foreign exchange rates year-over-year.
In Dorel Industries financial report on its 2nd quarter results its is said that “Dorel Sports rebounded from a difficult start to the year with improved second quarter adjusted operating profit versus first quarter. Compared to prior year, second quarter revenue growth was over 10% at both Cycling Sports Group (CSG) and Caloi. CSG recorded growth in all key regions with good momentum from recent product launches. Caloi continued to grow on new product innovation and was further aided by a gradual improvement in the Brazilian economy. Pacific Cycle experienced a modest revenue decline overall with the negative impact of the Toys“R”Us U.S. liquidation, but revenue to other key customers increased.”
During the second quarter of 2018 Dorel Sports sold its apparel business to Louis Garneau Sports Inc. The transaction resulted in restructuring costs of USD 11.2m of which US$9.2 million was non-cash. The holding company’s financial statement notes “The primary components of the restructuring costs were a write-down of the Sugoi trademark and inventory markdowns. This divestiture will allow Dorel Sports to focus on its core strategic businesses of bikes, parts and accessories categories and electric ride-ons. Second quarter operating loss was USD 3.3m compared to an operating profit of USD 4.9m a year ago due to restructuring costs mentioned above. Excluding restructuring and other costs, adjusted operating profit rose USD 2.3m, or 40.5%, to USD 8.0m from USD 5.7m last year. For the six months, operating loss was USD 4.1m compared to an operating profit of USD 15.0m in 2017. When excluding the US$6.6 million impairment loss on trade accounts receivable from Toys“R”Us U.S. recorded in the first quarter of 2018, adjusted operating profit for the six months was USD 13.8m compared to USD 15.1m a year ago which is mainly explained by the 70 basis points decrease in adjusted gross profit offset by higher revenue.”
Results Dorel Industries
Listed Dorel Industries Inc, which next to Dorel Sports also includes Home and Juvenile divisions, announced slightly better results for the second quarter and six months ended June 30, 2018. The holding company’s second quarter revenue was USD 623.2m, up 2.0% from the same period a year ago. Reported net loss was USD 14.8m compared to reported net income of USD 11.4m in the second quarter of 2017. Adjusted net income increased 1.7% to USD 12.7m compared to USD 12.4m last year. Revenue for the six months was USD 1.27 billion, an increase of 0.6% compared to USD 1.26 billion last year. Reported net loss was USD 10.0m, compared to reported net income of USD 20.3m. Removing the impact of the first quarter impairment loss on trade accounts receivable from Toys“R”Us of USD 9.4m after tax, first half adjusted net income decreased to USD 27.6m compared to USD 35.1m a year ago.