Dorel Industries sees the global bicycle market tending toward stabilization after a decrease so far this year due to poor weather conditions in the spring. While bike dealers are playing a cautious hand in replenishing their pre-season inventory, sales rebounded slightly during the third quarter ended Sept. 30 in the company's Cannondale Sports Group with the introduction of new models, and the company is expecting higher sales and earnings in the fourth quarter for its whole Recreational & Leisure segment than a year ago.
The segment, which comprises many other bike brands, suffered an on overall sales decline of 6 percent in the third quarter on an organic basis because of heavy discounting on 2013 models due to the poor spring weather. Its sales would be moved into negative territory without Dorel's acquisition last Aug. 22 of a 70 percent stake in Brazil's largest bicycle manufacturer, Caloi, which helped to lift the division's sales by 1.2 percent to $231.6 million for the quarter, boosting also its operating margin.
The gross margin declined to 23.4 percent of sales for the segment from 24.2 percent in the year-ago period, but the operating margin increased to 6.1 percent from 5.5 percent. For the first nine months of this year, segment sales were off by 4.1 percent to $673.3 million, its gross margin went down to 23.8 percent from 25.2 percent, and its operating margin fell to 4.1 percent from 7.9 percent.
Across the group, total revenues declined by 1.0 percent to $607.3 million for the quarter and by 3.5 percent to $1,801 million for the nine months. Net income fell by 44.4 percent to $11.1 million for the quarter and by 41.2 percent to $46.6 million for the nine months.
Dorel continues to invest heavily in the development of new products. At the Eurobike show last August, Cannondale presented its first electric mountain bike, the Tramount. Another bicycle brand within the group, GT, won a Eurobike Gold award in the mountain bike category for its GT Sensor.
