Dorel Sports, whose Dorel Industries sports segment includes bike brands such as 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 is benefitting from continued strong demand for bicycles in its 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.
In particular, the Brazilian 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.
Dorel Sports’ 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 availability of containers and components, higher container costs and the inability to fill all orders. In addition, the fourth quarter of 2019 had included a significant adjustment on import costs for 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.
Increased commodity and shipping costs and a stronger Chinese yuan combined to disrupt the supply chain and increase the cost of products sold. 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 in the fourth quarter of 2019 and 2020.
As previously reported, in mid-February this year, Dorel Industries cancelled an agreement with a potential buyer, Cerberus Capital Management, that would have allowed it to go private..