21 July 2020
21 July 2020, Comments Comments Off on Thule Group second quarter, shows impact of coronavirus
Thule Group second quarter, shows impact of coronavirus

The coronavirus pandemic had a significant negative impact on the results for the second quarter, April to June 2020, for the Thule Group.

Net sales for the quarter decreased by 11.6 percent to SEK 2,043m (compared to SEK 2,311 in the same quarter of 2019). Adjusted for exchange rate fluctuations, sales declined 12.3 percent. Operating income decreased by 23.0 percent to SEK 430m (558). Adjusted for exchange rate fluctuations, the margin declined 3.0 percentage points. Net income was SEK 312m (419). Cash flow from operating activities totaled SEK 523m (431).

Commenting on the results, Magnus Welander, CEO and President of Thule Group said:

“The second quarter was exceptional in many respects for Thule Group, primarily due to the massive lockdowns in our core markets in Europe and North America due to the corona pandemic.

I am therefore very satisfied that, despite a decline of 11.6 percent in sales, we were again able to demonstrate our ability to manage major production fluctuations while maintaining high margins. In Q2 we delivered an EBIT margin of 21.0 percent (24.1).

In April sales nearly halved year-on-year due to lock- downs, while in May a number of countries began to permit active leisure activities. This meant that we in June regained some of the lost sales from the spring period and sales in June therefore grew strongly. The differences between countries and categories remained extreme, ranging from highly favorable growth to sales that were more than halved.

The large fluctuations between categories, countries and months naturally gave rise to major operational challenges. Nonetheless, we achieved operating income of SEK 430m (558) for the quarter. In addition, we generated an improved cash flow compared with prior year of SEK 523m (431).

During the quarter, sales in the Europe and ROW regions declined by 12 percent after currency adjustment. Similar to the situation at the end of the first quarter, performance was weak in countries with extreme pandemic measures, such as France, Italy, Spain and the UK, where sales declined significantly.

During the quarter, it was positive to note that the countries where the social restrictions were successively eased, immediately displayed a high level of growth and that some of the sales normally made during the spring were instead realized during the early summer period. This confirms that consumers want to continue living active lives and appreciate our products.

Our large and growing portfolio of products in the bike category (bike racks, bicycle trailers and child bike seats) stood out and performed strongly in the end of the quarter.

In the region Americas, sales declined by 12 percent in the quarter after currency adjustment. As in Europe, sales at the end of the quarter were strong, mainly driven by a very healthy level of demand for bicycle related products. The growth in these categories was partly fuelled by the large increase in bicycle sales in the US and Canada.

Sales in Latin America, however, were weak for the entire quarter due to the escalating pandemic situation in these markets.

We have focused on the health and safety of our employees since the outbreak of corona. At the same time, during the extreme fluctuations of the recent period, we were able to benefit from our production set-up, with flexible assembly plants and logistics flows. However, we were unable to fully meet the significant rise in demand for certain products at the end of June and beginning of July.

We foresee good opportunities to offset some of the lost sales from the spring season during the third quarter and to also continue to ride the wave of a generally strong bike sector in the countries that have opened up for travel and leisure activities.

However, we expect to see continued low demand in other categories, such as bags. We will also be challenged by the fact that some major markets still have extensive restrictions in stores and on the possibilities to carry out group activities. The consequences of the covid-pandemic creates much uncertainty, but we believe in our long-term approach with great products for active people.

We continue to push an agressive product development agenda to drive future growth. During the atumn, we are going to present many new products to our retailers and we will do so virtually, using new digital tools. The products will be launched to consumers in stores during the spring of 2021.

I want to finish by thanking all my colleagues at Thule Group who have demonstrated fantastic flexibility during a difficult period, with efforts ranging from how to resolve delivery challenges to ramp up rapidly at the end of the quarter as demands increased to developing new and inspiring digital sales tools featuring fantastic material in a short space of time.”