Dorel Sports, Dorel Industries’ sports segment whose brands include Cannondale, Schwinn, GT, Mongoose, Caloi and IronHorse, saw its revenues increase by 13.8 percent year-on-year to $265.3 million in the fourth quarter, or by 15.9 percent in constant currencies. This marks the seventh consecutive quarter of revenue growth for Dorel Sports, which benefits from continued demand for bicycles at the Cycling Sports Group (CSG) and Pacific Cycle divisions. The company said supply constraints resulted in inventory shortages, limiting growth and creating a significant backlog heading into 2021.
The Caloi brand experienced a record volume of orders, driven by the easing of Covid-19 restrictions, with revenues increasing by double digits in constant currencies.
The gross margin declined by 3.2 percentage points to 20.8 percent, and the operating profit for the quarter was $1.9 million, down from $9.8 million recorded a year ago, due to product mix, limited container and component availability, higher container costs and the inability to fill all orders. In addition, the fourth quarter of 2019 included a significant adjustment on import costs of bicycles.
For the full year, Dorel Sports’ revenues rose by 14.9 percent to $1.04 billion. The gross margin expanded by 0.9 percentage points to 22.0 percent, while the operating profit increased to $52.3 million, compared with $30.3 million in 2019.
Dorel Industries, the parent company based in Montreal, posted fourth-quarter revenues of $753.4 million, up by 7.8 percent from the fourth quarter of last year. It ended with a net loss of $22.9 million, compared with a net loss of $0.6 million for the year-ago quarter.
The management explained that while Dorel Sports is benefitting from higher demand, container availability and cost, increasing commodity costs and a stronger Chinese Yuan are combining to disrupt the supply chain and increase the costs of products. Despite this, the year 2021 is starting very strongly. For the first quarter, expectations are for revenues to increase significantly versus the year-ago period and adjusted operating profit to be ”much better” than both the fourth quarter of 2019 and 2020.
In mid-February this year, Dorel Industries had canceled an agreement with a potential buyer, Cerberus Capital Management, by mutual consent. The agreement would have allowed the Canadian company to go private.