Cannondale owner Dorel Industries has announced results for the second quarter and six months ended 30 June 2015. Total revenue for the quarter was US$669.6 million, up 2.1% year on year. Adjusted net income was US$16.6 million or US$0.51 per diluted share, compared to adjusted net income of US$19.8 million or US$0.61 per diluted share a year ago.
Reported net income was US$16.2 million or US$0.50 per diluted share, compared to US$15.2 million or US$0.47 per diluted share in the second quarter of 2014.The company noted that the net negative impact of foreign exchange on Dorel’s earnings equated to approximately US$0.23 per diluted share for the second quarter and US$0.53 per diluted share for the first six months of 2015.
Revenue for the six months increased 2.4% to US$1.34 billion.
“Dorel’s Juvenile and Sports segments continue to operate in an environment of challenging foreign exchange rates as the US dollar remains strong against practically all currencies,” said Dorel President & CEO, Martin Schwartz.
“This had a significant effect on our earnings, impacting operating profit in the two segments combined by a net negative amount of approximately US$12 million in the second quarter alone, bringing the net negative FX year-to-date impact to approximately US$25 million.”
He continued, “We have done a good job mitigating this impact with selective price increases and other proactive measures and our results reflect that.”
Second quarter Dorel Sports revenue decreased 12.3% to US$251.1 million compared to last year’s US$286.2 million. Six month revenue decreased by 8.8% to US$480.0 million. Organic revenue declined by approximately 5% in the quarter and 2% year-to-date, after removing the impact of varying foreign exchange rates year over year.
Dorel’s Sports division did see sales increase organically in Japan and the UK. Although, offsetting this, was an organic sales decline in the quarter in Europe as dealers purchased inventory in the first quarter ahead of price increases implemented in April and in anticipation of the launch of new model-year 2016 products in the third quarter.
New pricing on model year 2016 bicycles has been announced and, according to Dorel, the introductions have received excellent reviews from retailers and media.
The sales decline in North America was due partly to a wet month of May as well as to mass customers reducing inventory levels in the sporting goods category.
The US dollar appreciation against most of the currencies in Dorel’s markets accounted for a net negative impact its sport business’ operating profit of approximately US$7 million during the second quarter and US$14 million during the first six months.
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