Dorel Sports, a division of Dorel Industries, is scaling up operations for its European Cycling Sports Group (CSG), centralizing them in the Netherlands. The management said the move will support overall growth and maintain the growing momentum of the Cannondale brand.

The existing Dutch assembly plant in Oldenzaal is being transformed into a state-of-the-art facility to more than double its current production capacity of Cannondale bicycles and e-bikes, and to allow for an increasing focus on premium quality products. All departments related to production and supply are being merged in the new facility.

In addition, CSG’s European headquarters are being relocated to Woudenberg on a new campus. The offices in Oldenzaal and Basel, Switzerland, have been closed. The reorganization is expected to be completed by year-end and will result in estimated restructuring costs of $8 to $10 million, of which $3.8 million was recorded in the fourth quarter.

The management said this decision is supported by the excellent results enjoyed by Dorel Sports in Europe in 2019, and that the changes will enable the company to serve its customers better and boost its brand presence.

Dorel Sports posted revenues of $233.2 million for the fourth quarter ended on Dec. 30, inching up by 0.2 percent from the same quarter a year earlier. Revenues from CSG declined, although Cannondale e-bikes were popular, in contrast with the rest of the business.

The Pacific Cycle Group (PCG) did well, thanks to strong point-of-sale activity at key retailers and robust e-commerce sales. The company said that it obtained some relief from U.S. tariffs on children’s bicycles imported from China and this mitigated the impact recorded earlier in the year.

The company’s Brazilian subsidiary, headed by the Caloi brand, also enjoyed a sales rise in the quarter, thanks to price increases on some models and an improved product mix due to higher Cannondale sales. On the other hand, the Brazilian operation’s results were affected by restructuring costs of $3.8 million from the merger of offices in São Paulo and Atibaia into a new office in São Paulo.

Overall, Dorel Sports’ gross margin jumped by 3.3 percentage points to 24.0 percent. The operating profit reached $9.8 million, compared with an operating loss of $232.1 million for the fourth quarter of 2018. Adjusted to include impairment charges on goodwill, intangible assets and property, plant and equipment, restructuring and other costs, the operating profit soared by 164.5 percent to $13.6 million.

For the full year, Dorel Sports’ revenues progressed by 2.9 percent from the previous year to $909.0 million, while the gross margin narrowed by 0.2 percentage points to 21.1 percent and the adjusted operating profit rose by 1.3 percent to $191.9 million.

Dorel Sports accounted last year for 34.5 percent of the revenues of Dorel Industries, which also includes the Dorel Juvenile and Dorel Home divisions. The Canadian-based group reported annual revenues of $2.634 million, up by 0.6 percent, and an adjusted net income that fell by 57.6 percent to $16,760 million.

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