Dorel Industries reported sales at its cycling business rebounded strongly in the first quarter ended March 31, rising 18.1 percent to $240.3 million.
Gross profit at Dorel’s Recreational/Leisure segment jumped 17.8 percent to $60.4 million, or 25.1 percent of revenue, down 10 basis points from the first quarter of 2013. Operating profit soarted 71.0 percent to $16.3 million, or 6.8 percent of revenue, up 210 basis points from the 4.7 reached in the year earlier quarter. The segment owns the Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and Sugoi cycling brands.
“Sales rebounded at both Cannondale Sports Group (CSG) and Pacific Cycle as the global bicycle market strengthened. 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,” Dorel President and CEO, Martin Schwartz.. “The recovery in CSG was driven by a strong performance in Europe and the UK due to an early start to spring abroad. 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.”
Dorel acquired Calois, the largest distributor of bicycles in Brazil, in 2013.
The Canadian company said Cannondale Sports Group (CSG) did particularly weel in Europe and the United Kingdom due to early spring weather that has hampered snowsports sales in North Europe. Favorable exchange rates also boosted results.
Organic revenue increased by approximately 8 percent, after excluding the effect of acquisitions and excluding the impact of varying foreign exchange rates. Included in the first quarter is a restructuring charge of $500,000 as part of the segment's overall plan to enhance its competitiveness. It is expected that an additional $2.6 million will be taken in restructuring charges through 2014.
The performance persuaded Dorel to promote Peter Woods from Interim Group President & CEO to Group President & CEO, Recreational/Leisure segment.
“In Recreational/Leisure, we have had a good start to the year, particularly in Europe,” Schwartz said. “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. In the second half we are also going to see the full benefit of our Caloi acquisition, so we remain confident about our return to much higher levels of profitability.”
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