MONTREAL, Quebec (BRAIN)—Dorel Industries reported its highest six-month revenue and net income in company history on Thursday, aided in part by the purchase of Cannondale and Sugoi in the first quarter.
Dorel’s recreation and leisure segment, which includes the Cannondale Sports Group and Pacific Cycle, was up 60 percent in revenue in the second quarter of 2008 compared with the same time period in 2007.
Cannondale, GT, Sugoi, and IBD-specific models of Schwinn and Mongoose fall under the Cannondale Sports Group division, while Roadmaster, Pacific, PTI Sports and non-IBD models of Schwinn and Mongoose make up Pacific Cycle.
Second-quarter revenues in the segment were $191.7 million compared with $119.7 the year before. Gross profit was 87.2 percent higher in 2008.
The success of the segment is largely due to the acquisition of Cannondale and Sugoi in February, said Martin Schwartz, Dorel’s president and chief executive officer, in an earnings conference call on Thursday.
Mass merchant bicycle sales were also up in the second quarter, Schwartz said.
Cannondale performed slightly better than expected, recording organic growth of 10 percent, split evenly among Europe and North America, he said.
“It’s a great brand,” Schwartz said. “We’re very excited about the future. There are a lot of growth opportunities and we’re very busy setting up our growth strategy.”
Part of that strategy includes cross-selling GT and Cannondale at their respective dealers. The first move in that direction was a recent agreement for Cannondale’s distributor in France to also distribute GT in that country, where GT didn’t previously have a presence, Schwartz said.
PTI Sports sales did not factor into second quarter results as Dorel just bought the company in June.
Dorel also includes two other segments—juvenile and home furnishings. Overall the company revenue of $1.1 billion in the first six months of 2008, a 25 percent increase from the first six months of 2007.
“Considering the difficult North American economic environment and the continuing negativity around consumer spending habits, all three of our business segments have performed extraordinarily well,” Schwartz said, citing higher gas prices, environmental concerns and fitness as the reasons behind strong bike sales.
For more details on Dorel’s second-quarter performance, be sure to read the September issue of Bicycle Retailer and Industry News.
—Nicole Formosa
