Dorel Industries Inc. reported that second quarter revenue at its Dorel Sports segment decreased 11.6 percent, to $209.1 million and by approximately 11.1 percent after removing the impact of varying exchange rates year over year.
Six months revenue decreased $29.9 million, or 6.6 percent, to $423.1 million and by approximately 6.4 percent after removing the impact of varying exchange rates year over year. Organic revenue declined by approximately 13.4 percent and 11.7 percent for the quarter and six months, respectively, when removing foreign exchange fluctuations and the change in Cycling Sports Group (CSG) International’s business model, for which the revenue recognition transitioned from a licensing model to a distribution platform.
Part of the revenue shortfall in the second quarter resulted from weakness in consumer demand in the mass bike channel due particularly to the prolonged unfavorable North American weather. CSG second quarter revenues declined due to lower discounted sales to the Independent Bike Dealer (IBD) channel when compared to prior year’s second quarter. CSG’s closeout sales in the quarter represented 7 percent of sales volume in 2017 compared to 21 percent in the prior year’s second quarter and excluding these closeout sales, revenues were flat for the second quarter year-over-year and as a result, gross margins were improved. In Brazil, Caloi’s top line was affected by weak consumer demand, amid ongoing political and economic turmoil, as well as increased competitive pressure as other key brands in the market began to reduce retail price points. This was true for both the quarter and year-to-date.
Second quarter operating profit was $4.9 million compared to an operating loss of $50 million a year ago. Excluding 2016’s impairment losses, restructuring and other costs, adjusted operating profit rose to US$5.7 million from US$5.2 million in 2016. For the first six months, operating profit was $15 million compared to an operating loss of US$44.7 million in 2016. Excluding impairment losses, restructuring and other costs, adjusted operating profit was US$15.1 million compared to US$10.5 million a year ago. The improvement in adjusted operating profit for both periods was due to improved margins and a reduction in operating expenses.
Brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI.
Photo courtesy Cannondale