MONTRÉAL (BRAIN) — Dorel Sports, the parent of Cannondale, Schwinn, Mongoose, Pacific and other brands, reports third-quarter sales of $306 million, a 22.1% increase over the same period last year.
Dorel Industries, the parent of Dorel Sports as well as Dorel Home and Dorel Juvenile, announced plans this week to go private as Cerberus Capital is backing a family of shareholders in that bid.
In the Sports division, adjusted operating profit was $27.8 million, up nearly 400% from the $5.6 million tallied in the quarter last year.
"This was the sixth consecutive quarter of revenue growth for the segment. The continuing record demand for bicycles throughout the summer drove another quarter of substantial growth at the Cycling Sports Group (CSG) and Pacific Cycle divisions," the company said.
Looking ahead, the company said it has already seen negative impacts in Europe from new wave of COVID-19 infections there, and resulting government restrictions on stores and activities.
"While thus far, government subsidies (in Europe) have softened the impact on consumers in most markets, it is unknown if this will continue going forward. In fact, government restrictions, similar to those put in place earlier in the year, are back in certain markets, which will almost certainly impact our sales,” said Dorel's president and CEO, Martin Schwartz.
Schwartz said all three Dorel divisions continue to struggle with supply chain restrictions and increased costs from China. And he said the recent strength of China's currency relative to the U.S. dollar could result in cost increases.
"While we remain confident in the long-term, the fourth quarter may be challenging," he said. "While overall adjusted operating profit is forecasted to be similar to last year, there is downward risk to our projections. We believe that the challenges faced in the fourth quarter could be overcome and that 2021 is anticipated to be a good year leveraging the strengths of our three business segments.”
Across all divisions, Dorel Industries' revenues in the third quarter were $753 million, up 9.9% over the period last year. reported net income was $26.2 million, compared to a net loss of $4.3 million last year.
“All three of our business segments contributed to an excellent quarter for Dorel. In Sports, the second quarter trend of increased demand for bicycles continued and outpaced product availability. In spite of this, the segment was still able to achieve the highest earnings in its history," Schwartz said.
