Dorel Starts 2014 With Strong First Quarter
MONTREAL, Canada – The first quarter of 2014 marked a turnaround for Dorel Industries, owner of brands like Cannondale, Schwinn, Mongoose, GT and Caloi, with the Canadian-based company recording an increase in revenue and a rise in net income for the period.
Also for Dorel, the early spring and good weather in Europe helps the company’s bike business rebound from its 2013 results. According to president and CEO Martin Schwartz, a big part of the reason for the positive news can be credited to its Recreational/Leisure division, which includes the notable cycling brands.
Strong performance in Europe
“Sales rebounded at both Cannondale Sports Group (CSG) and Pacific Cycle as the global bicycle market strengthened,” Schwartz noted. “Coupled with management’s intense restructuring efforts and other cost containment initiatives, operating profit in the segment was up 71% over last year’s first quarter. The recovery in CSG was driven by a strong performance in Europe.”
Total revenue of the Recreational/Leisure division was up 18.1% to US$240 million. Schwartz also noted that the 2013 purchase of Brazilian bike maker Caloi is beginning to bear fruit. “The integration of our Caloi acquisition is going well but that business is very seasonal so the first quarter segment operating results were slightly negative with Caloi profitability only beginning in the second quarter.”
Overall, the Recreational/Leisure division’s organic revenue increased by approximately 8%, after the effect of acquisitions was removed and the impact of varying foreign exchange rates excluded. Included in the first quarter is a restructuring charge of US$0.5 million. This is part of the segment’s overall plan to enhance its competitiveness. It is expected an additional US$2.6 million will be taken in restructuring charges through 2014.
According to Schwartz, the first quarter results are indicative of a continuing trend. “The first quarter results are indicative of a continuing trend”, Schwartz stated. “The market continues to look positive. The global bike business is improving and the good news won’t be limited to just Europe. As we look to the full year, we believe the rebound will continue not just in Europe but also in North America in both the IBD and mass channels.”