Dorel Sports sales grew approximately 3 percent in currency-neutral terms in the first quarter ended March 31 as success overseas was tempered by the U.S., where bicycle sales slipped below year ago levels in January but got back on plan in March, according to parent company Dorel Industries Inc.
Dorel Sports revenue decreased by $11.4 million, or 4.8 percent to $228.9 million in the first quarter ended March 31, but grew approximately 3 percent in currency-neutral terms.
Organic growth at Cannondale Sports Group (CSG) led the segment with particularly strong sales at independent bike dealers (IBD) in Europe and Japan. Caloi also delivered solid organic growth due to the increased demand of its opening price point products as well as the ongoing popularity of Cannondale, Schwinn, Mongoose and GT in the Brazilian market.
The success overseas was tempered by the U.S., where there has been a softer start to the year. January was slow, but sales improved throughout the quarter with March back on plan. This trend has continued into April.
Operating profit for the quarter was $11.6 million versus $16.3 million in the prior year, with the net negative impact of exchange rate fluctuations accounting for approximately $7 million in lower earnings. Excluding this impact of foreign exchange, operating profit for the quarter would have increased by approximately 12 percent. As in Juvenile, price increases have been implemented on a selective basis to mitigate the currency issues. In Brazil, Caloi has successfully implemented increases and has announced more to go into effect in the second quarter.
First Quarters Ended March 31
||$||% of rev.||
||$||% of rev.||
“As expected, the negative impact of the increased value of the US dollar against practically all of our local currencies severely depressed earnings in the first quarter of 2015,” stated Martin Schwartz, Dorel President & CEO. “Although rates have stabilized somewhat over the past month or so, we have not seen any of the currencies in our markets significantly increase in value. As such, we expect the lower earnings in our Juvenile and Sports segments to continue into the second quarter. Now that the currencies have stabilized, price increases have been determined and implemented where relevant. We anticipate this will benefit the second quarter, but the significant benefit will be in the second half.
“At Dorel Sports the second quarter should again organically beat sales and earnings compared to the same period last year, excluding the impact of foreign exchange,” Schwartz continued. “As stated in our year-end release, we believe the second half will be strong, and will exceed the first half. Significant new product introductions should generate incremental volume and revised pricing will boost earnings.