Dorel Industries Inc. reported organic revenue increased by 6 percent at its Recreational/Leisure segment in the third quarter, and 8 percent for the nine months,  ended Sept. 30.

Overseas markets in the independent bicycle dealer (IBD) channels, particularly Europe and Japan, as well as sales to the North American mass merchant distribution channels contributed to the quarter and year-to-date organic growth. Increases in revenue in the IBD channel were due, in part, to growth in the E-bike and mountain bike categories, while Pacific Cycle benefited from improved consumer demand for bicycles and electric ride-on toys in the mass merchant channel.

The segment designs and markets premium bicycles and cycling apparel, footwear and gear under
Cannondale, GT, Schwinn, Sugoi and other brands for the IDB channel, while Pacific Cycle and is a major supplier
of bikes to mass merchants.

Despite an overall weak economy in Brazil, the company’s Brazilian subsidiary Caloi contributed to operating profits after two consecutive quarters of losses. Bicycle sales in Brazil are starting to benefit from the successful introduction of Cannondale, GT and Schwinn which has led to gains in domestic market share. With the summer season about to begin in Brazil and the distraction of the World Cup behind them, Dorel said Caloi is poised for a strong fourth quarter.

Recreational/Leisure’s operating expenses in the quarter include costs related to changes in the Cannondale Pro Cycling (CPC) team. The signing of a new agreement with Slipstream Racing led to a one-time write-off of Cannondale Sports Group’s equity investment in the Brixia associated team of $3.4 million in the quarter.  An additional $1.1 million was expensed for funding needed to bridge a shortfall in sponsorship income as the team could not solicit adequate sponsorship during the current transition period.  Restructuring costs of $0.9 million for the quarter and $3.1 million year-to-date were recorded related mainly to the closure of the Bedford, PA assembly operation.  Excluding the impact of the one-time CPC write-off, operating profit in the third quarter significantly improved year-over-year.
 

Recreational/Leisure Segment


 

 

 

 

 

 
Third Quarters Ended September 30

 
2014 2013
 

 
$ % of rev. $ % of rev. Change %

Total revenue

266,503

 

231,591

 

15.1%

Gross profit

62,052

23.3%

54,185

23.4%

14.5%

Operating profit

14,769

5.5%

14,105

6.1%

4.7%

 

 

 

 

 

 

 

 

 

 

 

 
Nine Months Ended September 30

 
2014 2013
 

 
$ % of rev. $ % of rev. Change %

Total revenue

793,100

 

673,279

 

17.8%

Gross profit

189,842

23.9%

160,024

23.8%

18.6%

Operating profit

46,292

5.8%

27,327

4.1%

69.4%