Despite Drop in 1st Quarter Revenue Dorel Sees Light at End of Tunnel
MONTRÉAL, Canada – Dorel Industries Inc. announced that its Dorel Sports (bike) division saw first quarter revenue drop by 10.7 percent to USD184.5 million (164.3m euro). Its Dorel Sports’ Cycling Sports Group (CSG) businesses had a very good quarter in all of its markets. However, “Offsetting CSG improvement was Pacific Cycle which accounted for most of the revenue decline and reduced the increase in operating profit for the segment as a whole,” says Dorel’s 2019 first quarter financial report.
That report also states that for the whole of listed Dorel Industries Inc. that next to Dorel Sports also includes Dorel Home and Dorel Juvenile divisions, revenues dropped by 2.6 percent to USD625.6 million (556.9m euro). Reported net loss was USD8.3 million (7.4m euro). This includes USD14.4 million (12.8m euro) of pre-tax restructuring charges. Excluding that adjusted net income was USD5.8 million (5.2m euro).
Organic revenue drop
On its activities in cycling products (Cannondale, GT, Schwinn, Pacific Cycle, Charge, Fabric, Guru, Mongoose, Caloi, IronHorse and Kid Trax) Dorel Industries reports further that (excluding foreign exchange rate changes year-over-year and the divesture of the performance apparel line of business), “Organic revenue decreased by approximately 5.2%. Operating profit was USD4.5 million (4.0m euro) compared to an operating loss of USD0.8 million (0.7m euro) last year. The prior year’s first quarter included a USD6.6 million (5.9m euro) impairment loss recorded on Toys“R”Us trade accounts receivable and a USD1.5 million (1.3m euro) operating profit related to Toys“R”Us shipments prior to the U.S. bankruptcy.”
CSG’s strong performance
“Cycling Sports Group posted higher sales in all major markets,” continues the statement. “This was driven by new products and increased sales of e-bikes in Europe and growth in the U.S. independent bike dealers (IBD) channel, challenging the industry’s negative trend. In Brazil, Caloi revenue grew significant double digits in local currency due to several factors, including a better mix, sales to the country’s bike sharing program and price increases implemented last year. The bulk of the operating profit in the quarter was derived from CSG, which posted its fourth consecutive quarter of improvement, excluding impairment losses on intangible assets and property, plant and equipment, and restructuring and other costs, with the Cannondale line demonstrating excellent momentum.
“Offsetting CSG improvement was Pacific Cycle which accounted for most of the revenue decline and reduced the increase in operating profit for the segment as a whole. This was due to high retailer inventory remaining from the fourth quarter and poor weather in certain regions. April sales have rebounded with strong POS at all retailers. This will be reflected in the second quarter results as two-thirds of the first quarter revenue loss in the mass channel was already recouped in April.”
Dorel has annual sales of USD2.6 billion (2.3bn euro) and employs approximately 9,200 people in facilities located in twenty-five countries.