Dorel Reports Strong Second Quarter Revenue
MONTREAL, Canada – Dorel Sports including Cycling Sports Group (CSG; Cannondale, GT, Mongoose among other brands as well as Pacific Cycle and Caloi) showed a strong second quarter performance with revenues increasing by 7.4 percent. Excluding foreign exchange rate fluctuations year-over-year and the divesture of the performance apparel business last year, organic revenue increased 11.1 percent.
Second quarter results reflected successful new model (e-bike) launches and continued strength at CSG and Caloi. Revenue grew to USD 241.0 million. Six-month revenue decreased USD 5.6 million, or 1.3 percent to USD 425.6 million due to first quarter softness in Pacific Cycle’s mass merchant business.
‘Success in Europe driven by e-bikes’
Listed Dorel Industries Inc says on its first half year results “CSG posted high single-digit organic growth, with continued success in Europe, driven by the e-bike category including the new Tesoro Neo X and Synapse Neo. The U.S. IBD channel saw solid growth thanks to Cannondale launches such as the Treadwell, Topstone and EVO. Introductions of the model year 20 line-up were earlier than prior years and have received exceptional reviews from both the bicycle media and riders. Caloi was solid with low double-digit organic growth on the back of success in sales to Brazil’s bike sharing program and a better mix due to Cannondale’s growth. Pacific Cycle reversed the first quarter sales decline with double-digit revenue growth due to a strong sales recovery at retail, both at brick and mortar and on-line.”
Impacts of U.S. tariffs
Dorel Sports reported and adjusted operating profit for the quarter was USD 10.1 million compared to the prior year’s operating loss of USD 3.3 million and adjusted operating profit of USD 8.0 million, excluding restructuring and other costs. CSG recorded significant growth in adjusted operating profit with its multiple successful new product launches. Partially offsetting this increase was lower adjusted operating profit at Pacific Cycle, principally due to the negative impacts of U.S. tariffs on its China based supply. First half reported and adjusted operating profit was USD 14.6 million compared to an operating loss of USD 4.1 million and an adjusted operating profit of USD 7.2 million, excluding restructuring and other costs. The first quarter of 2018 included a USD 6.6 million impairment loss on trade accounts receivable from Toys“R”Us.
Dorel Industries Inc’s revenues
Including its Dorel Home and Dorel Juvenile divisions Dorel Industries Inc’s revenues for the six months was USD 1.30 billion, an increase of 2.4 percent compared to USD 1.27 billion last year. Reported net loss was USD 5.5 million compared to USD 10.0 million a year ago. First half adjusted net income was USD 12.1 million compared to USD 18.2 million a year ago. The prior year included a first quarter impairment loss on trade accounts receivable of USD 9.4 million after tax related to the liquidation of Toys“R”Us in the U.S. Without this impact, adjusted net income for the six months of 2018 was USD 27.6 million.
“We are encouraged that, without exception, all our businesses have produced top-line growth. U.S. tariffs imposed on China-sourced goods and its impact on retail price points have created uncertainty on customers’ buying decisions as well as on supply chain and inventory planning processes. The chaotic market conditions have resulted in margin pressure, particularly at Dorel Home and in the mass channel at Dorel Sports. New product launches at Dorel Sports have delivered excellent results and we remain encouraged going forward, particularly with the on-going success at Cycling Sports Group (CSG),” commented Dorel President & CEO, Martin Schwartz.