In Region Europe & ROW, sales increased 11.2 percent after currency adjustment, while Region Americas’ sales grew 3.4 percent after currency adjustments.
Underlying EBIT amounted to SEK 258 million (238), corresponding to an increase of 8.5 percent and a margin of 18.6 percent (18.4). Adjusted for exchange rate fluctuations, underlying EBIT rose 8.5 percent and the margin remained unchanged.
Gross income for the quarter totaled SEK 570m (542), corresponding to a gross margin of 41.1 percent (41.8). The gross margin declined somewhat, primarily due to higher raw material prices, which were partly offset by an improved product and customer mix in the product categories.
Operating income totaled SEK 258m (235). Underlying EBIT amounted to SEK 258m (238), corresponding to an operating margin of 18.6 percent (18.4). Compared with the third quarter of 2016, exchange rate fluctuations had no impact on underlying EBIT and, accordingly, underlying EBIT margins were unchanged year-on-year. As planned, during the quarter, we also increased our investment in product development with a focus on larger projects in the stroller (within Active with Kids) and suitcases (within Packs, Bags & Luggage) categories, where we also increased our marketing and selling expenses by strengthening the organization ahead of future investments in growth. In parallel, we continued to continuously improve our product offering in Sport&Cargo Carriers and RV Products. Healthy profitability has thus primarily been achieved by being able to generate higher sales with essentially the same organization in terms of other support functions, meaning that other expenses did not increase at the same pace.
Net income was SEK 185 million against SEK 156 million a year ago.
Cash flow from operating activities totaled SEK 519 million versus SEK 436 million in the same period a year ago.
Thule updated its financial targets that presented in conjunction with the capital markets day held on September 20, with a raised long-term EBIT margin of ≥ 20 percent (from ≥ 17 percent) and a new range for the leverage ratio, Net debt/EBITDA at of 1.5 – 2.5x (previously around 2.5x).
In his comments, Magnus Welander, CEO and president: stated:
Strong trend continues
In the third quarter the positive growth trend achieved during the year in both of our sales regions continued. Sales growth was 8.5 percent(after currency adjustment) during the quarter and we achieved an underlying EBIT margin of 18.6 percent.
The high profitability was achieved despite being, as previously announced, in the midst of the most ambitious period in the company’s history in terms of product development investments in our traditional categories as well as in our newer categories, such as strollers.
New long-term targets and new categories
Our first capital markets day since listing in 2014 was held on September 20 in Stockholm. In conjunction with the above, updated long-term targets were presented, where above all, the raised target for the underlying EBIT margin (from ≥17 percent to ≥20 percent) demonstrates our belief in our plans to continue to drive a positive trend in increased profitability.
We will continue to report sales in the two sales regions (Americas and Europe & ROW) on an ongoing basis. On a full-year basis, we will also present the trends in four product categories:
- Sport&Cargo Carriers
- Packs, Bags & Luggage
- Active with Kids
- RV Products
The previous product categories, Bags for Electronic Devices and Other Outdoor&Bags, have been divided into three clearer product categories: Packs, Bags & Luggage; Active with Kids; and RV Products.
Strong trend for Region Europe & ROW
The positive trend for Region Europe & ROW continued with a currency-adjusted sales increase of 11 percent in the third quarter. This means that to date, we have achieved currency-adjusted growth of 13 percent this year.
We have increased sales in all four product categories with Active with Kids being the fastest growing product category on a percentage basis, where the multisport trailer, child bike seat and stroller categories are all delivering robust growth. RV Products has also grown strongly in a booming European motorhome and caravan market, where we also continue to capture market shares.
In Sport&Cargo Carriers we continue to deliver stable growth and strengthened our leading position through successful launches of new bike carriers, such as the practical foldable tow-bar mounted Thule EasyFold XT.
Growth in Packs, Bags & Luggage has mainly been driven by the launch of our new Thule Subterra luggage series comprising both suitcases and smaller bags for everyday use for the modern business traveler.
Positive quarter for Region Americas
In Region Americas, sales rose 3 percent (after currency adjustment) during the quarter, which means we increased sales 4 percent after currency adjustment in the first nine months of the year.
Product category trends are similar to those in Region Europe & ROW. However, a larger share of sales in the region comprise older bag models to consumer electronics retailers and, moreover, market conditions are generally tougher for retail chains with physical stores in shopping malls in the U.S. Overall this means growth is lower than in Europe.
The Active with Kids category is also growing fastest in Region Americas, primarily due to strollers and child bike seats. Sport&Cargo Carriers show stable growth, with the new Thule Motion XT roof box family proving a strong driver.
It was also positive to note that Packs, Bags & Luggage grew in the third quarter driven by the new Thule Subterra luggage collection.
At present, we have very limited sales in RV Products in this region.
Well-received products at trade fairs
During the quarter, we presented next year’s products for all our product categories at a number of successful fairs. Of particular note was the launch, at the leading Kind&Jugend juvenile fair, of Thule Sleek (a city stroller with the flexibility to be configured for a second child and for which sales will start in the second half of 2018) and an update of our Thule Urban Glide 2 stroller (to be launched in the first quarter of 2018). Both models attracted considerable attention from retailers and continue to build on this year’s very successful launches of the Thule Chariot multisport trailers and Thule Yepp Nexxt child bike seats.
We are now entering a period when we will be making larger investments than ever in product development, for products that will be launched in 2018 and thereafter, with a strong focus on driving long-term profitable growth.
Photo courtesy Thule
