Dorels Recreational/Leisure division, which primarily consists of the Pacific Cycle business, reported that revenue increased 7% to $110.2 million during the second quarter compared to last year's $103 million. Earnings from operations rose 6.3% to $13.4 million from $12.6 million. The Pacific Cycle acquisition became effective in February 2004, and the additional month of revenue in January 2005 results in organic year-to-date sales growth of 14.7%. First half earnings from operations increased 15.9% to $22.1 million from $19.1 million last year.
During a conference call with analysts and the media, Dorel management said that retail sales of the Sting-Ray model continue to be above average compared to other bicycle categories and “remains a key part” of the Schwinn portfolio. Pacific Cycle plans to sell Mongoose branded bicycles in China and is moving forward with arrangements for a spring 2006 promotional tour and an on-going presence in larger Chinese provinces. Chinese athletes are also being scouted to compete and perform under the Mongoose brand, thus providing grassroots promotions and opportunities for widespread media coverage promoting Mongoose.
Operating costs continue to run lower than last year due to improvements in controlling product liability costs as well as other cost containment measures.
All three segments contributed to Dorels total company second quarter and year-to-date revenue improvement. Overall organic revenue growth was 5.1% in the quarter and 9.6% year-to-date, excluding both the impact of currency variations and the additional month of revenue in 2005 versus 2004 in the Recreational/Leisure segment. Dorel Industries total company Q2 net earnings rose 21.4 % to $21.7 million or 66 cents per diluted share compared to $17.9 million or 54 cents per share earned in the second quarter a year ago.