MONTREAL (BRAIN) — Dorel Sports third quarter revenue was flat at $266.5 million, but was up about 9 percent after removing the effect of currency exchange fluctuations — an increase that Dorel Industries credited to its IBD sales.
The company said increased demand of its 2016 model year bikes drove the increase. It also said Caloi bikes sales grew in Brazil at lower prices.
In the first three quarters of the year, Dorel Sports sales were down 6 percent to $746.5 million, but were up 2 percent in currency-neutral, or "organic," terms.
Dorel Industries, Dorel Sports' parent, announced total revenue of $679.3 million for the quarter, up from $673 million last year.
In the Sports division, which includes mass market and IBD brands, Dorel recorded $4.5 million in pre-tax restructuring charges in the quarter, related to structural changes in both the Cycling Sports Group and Sugoi divisions. Dorel is consolidating its Sugoi and Cannondale apparel product lines into a single global apparel portfolio with Sugoi as the primary brand, which will be moved to a new "Sugoi center of excellence" at a new location. Dorel said the apparel-related restructuring will cost an additional $1 million in the fourth quarter but once completed will deliver annual cost savings of an estimated $4 million.
Third quarter adjusted operating profit was $10.8 million, down $9.3 million, or 46.3 percent. Dorel said currency fluctuations cost the sports divisions about $10 million in the quarter.
"Despite challenges through much of 2015, Dorel Sports will turn the corner in the fourth quarter with increases over last year in both sales and earnings," said Dorel president and CEO Martin Schwartz. "Considerable changes have been made in the segment, new pricing has been implemented on 2016 model year bicycles and Dorel Sports has launched its largest ever number of new bicycle platforms. These new investments will pay off with the start of a new positive trend going forward. Foreign exchange remains unpredictable, however the segment is in a stronger position to face this issue."
