Dorel Reports Multi Million Impairment Loss Versus Increase In Revenue For 2018
MONTREAL, Canada – Today Dorel Industries Inc. announces drastic results for its Sports division (including Cannondale, Schwinn, GT, Mongoose, Pacific Cycles and Caloi) in 2018 and in the fourth quarter in particular. For the year, Dorel Sports’ revenue increased by USD 17.6 million, or 2.0 percent, to USD 883 million and a gross profit of USD 187.8.
However, the company’s operating loss came in at a big USD 229 million compared to an operating profit of USD 21.8 million in 2017. According to the statement Dorel Industries issued today, “The miss in the fourth quarter was primarily due to the slowdown in bicycle sales across the board at Pacific Cycle as well as by the unexpected fourth quarter impairment loss on trade accounts receivable of USD 2.1 million as Evans Cycles entered administration in the UK.”
‘CSG performed well’
Dorel’s Cycling Sports Group (CSG) performed well in 2018. “CSG posted double-digit organic revenue growth and significant operating profit improvement, mainly from growth in Europe and in the U.S. sporting goods channel due to innovation in model-year 2019 products. In Brazil, Caloi also delivered double-digit sales and operating profit growth in Brazilian Reals, driven by a stronger mix of products, success with their 29-inch mountain bikes as well as with the Cannondale line”, is reported.
Dorel Sports expects to see a “Rebound in profits for 2019. The segment revenue is forecasted to grow in the mid-single digits driven by price increases related to tariffs passed on to consumers at Pacific Cycle and volume and market share growth in CSG and Caloi. Also the operating profit at CSG and Caloi is expected to increase throughout 2019. CSG growth will be the results of recent restructuring efforts and product innovations particularly in the expanding e-bike category.”
Also at Caloi, Dorel expects increased sales with its expansion into the OPP segment and OEM manufacturing for retail and bike share programs. Revenue and adjusted operating profit improvement at Pacific Cycle is expected mostly in the second half, based on the rapidly growing e-commerce channel, new customer distribution points and an expanded product line. This includes a broadened line of electric ride-ons and entering adjacent categories, such as scooters.
“Dorel Sports was also affected by the on-going changes in the consumer products industry,” stated Dorel President & CEO, Martin Schwartz today. “We are in the process of actively addressing these realities. We are committed to continuing to take action to build value for Dorel shareholders, including making some tough but necessary decisions. Therefore, we will initiate a restructuring program to evaluate our global footprint and to optimize our company to meet these new realities.”
Changing retail landscape
“Like all consumer products companies, Dorel is not immune to the impacts of a changing retail landscape and evolving consumer habits,” adds Schwartz. “Traditional brick and mortar stores are facing difficulties as buying patterns of consumers evolve. We have recognized these new realities of retail require Dorel to be efficient, innovative, and nimble to maintain alignment with consumers. Dorel has been taking important steps to ensure that we can be competitive for the long-term and the online success of department Dorel Home is indicative of this.”