Dorel Industries Inc. has announced results for its fourth quarter and year ended December 30, 2019. Revenue for the full year was flat at US$2.63 billion, compared to US$2.62 billion the previous year. Reported net loss was US$10.5 million or US$0.32 per diluted share, compared to US$444.3 million or US$13.70 per diluted share the previous year. Adjusted net income for the year was US$16.8 million or US$0.51 per diluted share, compared to US$39.5 million or US$1.21 per diluted share last year.
“Our teams have done an excellent job bringing inventory down to more traditional levels, with a reduction of US$80 million since the third quarter. Dorel Sports revenue grew for the third consecutive quarter as our new models, particularly Cannondale, are selling well." stated Dorel President & CEO, Martin Schwartz.
The Dorel Sports segment of the company which includes brands Cannondale, GT, Pacific Cycle, and Caloi saw revenue for the year increase to US$909.0 million, up US$26.0 million, or 2.9%, from US$883.0 million the previous year. Pacific Cycle Group (PCG) and Caloi posted growth in the quarter while the Cycling Sports Group’s (CSG) revenue declined. According to an official statement, PCG rose on the back of strong POS at key retailers and robust e-commerce sales. There has been tariff relief on children’s bicycles and this mitigated the year’s earlier impact at PCG. Caloi benefitted through the quarter from price increases on their models and improved mix on higher Cannondale sales. CSG organic revenue1 growth was in most geographies with increased sales of Cannondale e-bikes and model year ‘20 product launches.
Dorel Sports operating profit for the year was US$30.3 million compared to an operating loss of US$229.1 million in 2018. Excluding impairment losses on goodwill, intangible assets and property, plant and equipment, restructuring and other costs, adjusted operating profit increased by US$13.9 million, or 70.0%, to US$33.8 million.
In a move to support its next level of growth and to maintain the increasing momentum of the Cannondale brand, Dorel Sports is strengthening its European CSG operations, which will be centralized in the Netherlands. The existing assembly plant in Oldenzaal is being transformed into a state-of-the-art facility to more than double its current production capacity of Cannondale bicycles and e-bikes, and allow for an increase in focus on premium quality products. All production and supply related departments are being merged into the new facility.
In addition, CSG’s European headquarters is being relocated to Woudenberg in a new, scenic campus, where an excellent working environment is being created in a setting that will bring CSG’s brands to life. The offices in Oldenzaal and Basel, Switzerland have been closed. The reorganization is expected to be fully completed by year-end and will result in estimated restructuring costs of between US$8 million to US$10 million, of which US$3.8 million was recorded in the fourth quarter.
“This is a major step in implementing CSG Europe’s strategic plan. We have had excellent results in Europe in 2019 and the exciting changes we are announcing today will enable us to better serve our customers, boost our brand presence, and further develop our culture,” commented Dorel Sports President, Peter Woods.
“Sales at Dorel Sports remain strong and the segment is anticipating another good year. The China supply chain is improving and product is expected to be increasingly stable as production gradually returns to normal,” stated Dorel President & CEO, Martin Schwartz. “The world economy is in uncharted waters due to the ongoing Coronavirus, the full impact of which is difficult to predict at this time. Historically, people have purchased juvenile products and personal recreation items such as bicycles during disruptions in the market and are likely to continue to do so. Supply chain interruptions in China will impact the delivery of orders in the first quarter and possibly into the second quarter. Despite overall business improvement, the Coronavirus and related foreign exchange impacts will likely affect the first quarter.”