Dorel Industries Inc. reported revenues at its Recreational/Leisure segment, which owns the Cannondale, Schwinn and Sugoi cycling brands, rose 18.8% in the third quarter ended Sept. 30 to $172.5 million.


Year-to-date, revenues are up 12.5% to $569.1 million from $505.7 million. Excluding the impact of new business acquisitions and foreign exchange variations on the segment's non-US based businesses, the segment's organic revenue increase was approximately 13% for the quarter and 8% year-to-date.

 

Increases, both in Europe and North America, were in the mass merchant and Independent Bike Dealers (IBD) channels, as increased promotional activity and successful new model introductions are driving sales.


Schwinn has seen important gains due to new launches and a concentrated advertising campaign, which will resume later this month. A strong end to the year is anticipated.

 

Cannondale's intensified R&D activities have led to the introduction of several new models, including the Cannondale E-Series electric bike, the Super X, the world's lightest mountain bike and the CAAD 10.

 

As announced, the Cycling Sports Group has significantly increased its commitment with Liquigas Sports and its sponsorship of a professional cycling team. The team has had a remarkable year, winning two of the three major UCI Grand Tours. Effective Jan. 1, 2011, Cannondale will become Co-Sponsor of the newly named Liquigas-Cannondale Pro Cycling Team. SUGOI will also become a sponsor, by providing the team with its newly designed uniforms.


Outlook


As expected, revenues continued to exceed prior year levels and the pace of earnings slowed in the third quarter relative to the first half of the year. Margins were pressured by higher input and ocean freight costs at most divisions. Although these costs have begun to retreat, consumer demand is currently soft, particularly in Dorel's Home Furnishings segment.

 

Expectations are for full year earnings to be on plan. Net income will exceed the prior year.

 

“Our bicycle segment continues to improve, for both our mass merchant and IBD businesses,” said  Martin Schwartz, Dorel President and CEO. “Investments in brand building and product innovation are proving to be successful with consumers in North America and Europe. The strategies put in place in Recreational / Leisure are working, the team is focused on great execution, and we'll continue to see progress,” said Schwartz.

 

 

Recreational/Leisure Segment

    ————————————————————————-
                      Third Quarters Ended September 30
    ————————————————————————-
                               2010                  2009
    ————————————————————————-
                               $   % of rev.         $   % of rev.  Change %
    Revenues             172,530                 145,175              18.8%
    Gross Profit          39,420     22.8%        33,771   23.3%      16.7%
    Earnings from
     Operations            9,532      5.5%         4,862    3.3%      96.1%
    ————————————————————————-


    ————————————————————————-
                       Nine Months Ended September 30
    ————————————————————————-
                               2010                  2009
    ————————————————————————-
                               $   % of rev.         $   % of rev.  Change %
    Revenues             569,095                 505,696             12.5%
   Gross Profit          137,062       24.1%     115,051   22.8%      19.1%    
   Earnings from
     Operations           41,717        7.3%      30,848    6.1%      35.2%
    ————————————————————————-