Dorel Industries Inc. said total revenue rose 54.9% at its Recreational/Leisure division to $136 million for the first quarter ended March 31. Gross profits and earnings from operations at the division more than doubled. While newly acquired Cannondale Bicycle Corp. accounted for much of the growth, Dorel said its lower priced bikes sold well as weary American consumers returned to the mass merchant channel to look for bargains.
combination of products and price points for consumers at the right time,” said Dorel CEO and President Martin Schwartz. “In light of the difficult economy in the United States, we are seeing consumers shopping more at mass merchants where Dorel has traditionally been strong. In Europe, where conditions remain better, consumers continue to seek higher-end products, and Dorel's European operations enjoy a solid position in this market. ”
The Recreation/Liesure segment experienced strong sell-through in advance of the busy spring season, particularly at the Pacific Cycle division with its mass merchant customers.
Dorel Industries – Recreational Leisure Segment
First Quarters Ended March 31
% of % of Change
$ rev. $ rev. %
Revenues(*) 136,144 100.0% 87,889 100.0% 54.9%
Gross Profit 34,626 24.9% 17,070 19.4% 102.8%
operations 14,909 10.7% 7,227 8.2% 106.3%
(*) – 2008 revenue figure excludes Inter-segment sales of US$2.7 million
Rising commodity prices are affecting the majority of the company's
operating divisions. In particular high crude oil prices, and their impact on freight and resin costs, as well as increases in steel and other metals, both domestically and in the Orient, are challenges to the company maintaining the same level of profitability. In addition, the costs of finished goods sourced in China are being affected by the weakening of the U.S. dollar versus the Chinese RMB.