GT owner Dorel sees revenue rise in 2014

But the World Cup put a temporary dent in Dorel's Brazil business
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Dorel Group has seen Q2 revenue up 9.2 per cent and half year revenue rise 9.1 per cent.

Dorel is owner of Cannondale, Schwinn, GT, Mongoose, Caloi, Iron Horse, Sugoi and Cycling Sports Group.

Total revenue for Q2 was US$655.8 million, up 9.2 per cent from US$600.4 million in the same period last year, like-for-like. Net income hit US$15.2 million. For the half year, revenue rose 9.1 per cent to US$1.3 billion compared to US$1.2 billion last year.

The acquisition of Brazil's Caloi dented earnings, with the World Cup also 'shifting consumer focus away from the bicycle business'.

"The momentum of the first quarter in the Recreational/Leisure segment carried into the second quarter as revenue grew by strong double digits and operating profit rose significantly," said Dorel President and CEO, Martin Schwartz. "Overall we are pleased with the earnings from operations for our three segments, however the costs related to the Caloi acquisition has resulted in our earnings to be lower than we hoped to see.

"Caloi's first half of the year performance was close to plan with a loss from operations at the segment level of US$0.8 million. Caloi was affected by the slowing economy in Brazil and consumers' focus on the month-long World Cup which shifted attention away from the bicycle business. Caloi is executing well and is growing its market share. We are expecting the bulk of the earnings to come in the fourth quarter as it is both the start of summer and Christmas in Brazil.

"Despite the softening Brazilian economy, we expect Caloi to grow versus last year and we are confident regarding its future contributions to the segment as we firmly believe this transaction will be a good long-term investment in Dorel's future."

Outside of bicycles (in Dorel's Recreational/Leisure divisions), the Juvenile arm of the business exceeded prior year results, while the Home Furnishings top line was flat with the prior year "as Internet sales continued their upward trend, offsetting the drop in brick and mortar revenue. As anticipated, operating profit for that segment decreased," the firm added.

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