Dorel Sports posted revenues of $235.3 million for the fourth quarter to Dec. 30, 2016, down by 7.3 percent from the fourth quarter a year earlier. Revenues declined by around 14.6 percent when removing currency rate fluctuations and the impact of the transition of Cycling Sports Group (CSG) International business from a licensing model to a distribution platform.
The revenue decline was primarily attributed to the change in the purchasing habits of North American CSG dealers to reduce their inventory prior to the cycling season, which is expected to move fourth quarter orders to the first half of 2017.
The division's revenues for the full year declined by 6.1 percent to $939.0 million, while organic revenues were down by around 8.4 percent. The drop was mainly attributed to the change in dealers' purchasing patterns, industry-wide discounting due to excess inventories at suppliers and retailers during the first half of 2016, and a generally soft global bike market.
In the fourth quarter, Dorel Sports' operating profit declined to $5.0 million. Adjusted operating profit increased by 10.8 percent to $10.2 million when excluding restructuring and other costs. The year-to-date operating loss of $33.9 million compared to an operating profit of $10.9 million in 2015. Excluding impairment losses, restructuring and other costs, adjusted operating profit declined by 24.9 percent to $31.5 million, mainly due to lower demand and reduced margins from discounting during the first half of 2016.
Dorel Sports is one of the three business segments of Dorel Industries, along with the Juvenile and Home Furnishing divisions. Dorel Sports consists of a large portfolio of brands including Cannondale, Schwinn, Caloi, Mongoose, GT, Sugoi, Guru and others.
Dorel Industries posted revenues of $648.7 million in the fourth quarter to Dec. 30, 2016, down by 3.0 percent from a year earlier. The Canadian group reported a net loss for the quarter of $5.6 million as compared to a reported net income of $6.6 million a year ago.
The reported net loss included restructuring and other costs and loss on reassessment of forward purchase agreement liabilities totaling $18.1 million pre-tax. Excluding these items, adjusted income before income taxes was $1.0 million compared with $11.0 million a year ago.
Adjusted net income for the quarter dropped to $7.7 million from adjusted net income of $14.1 million in the fourth quarter of 2015. For the full year, the group posted revenues of $2.60 billion, down by 3.0 percent from the previous year.
The reported net loss was $11.6 million as compared to a reported net income of $25.7 million the previous year. Adjusted net income for the year increased slightly to $58.3 million as compared to adjusted net income of $58.0 million in 2015.
The group has announced that starting this year, it will carry out restructuring actions in its Sports division in order to refocus the business and deliver enhanced profitability. These actions are expected to result in annualized savings of $5.0 million.
