Thule Group AB reported first-quarter earnings jumped 11.9 percent to SEK 220 million as revenue improved 5.6 percent to SEK 1.6 billion.
The company’s operating income was SEK 309 million, a 14.2 percent increase, while margin was 19.2 percent. After adjustment for exchange rate fluctuations, operating income rose 8.4 percent and margin improved 0.5 percent.
In Region Europe & ROW, sales increased 9 percent after currency adjustment in the first quarter. The product categories largely followed the trend Thule saw in 2017, with Active with Kids as the fastest growing product category, percentage-wise. During the quarter, growth was given a particular boost by the successful launch of the updated Thule Urban Glide 2 stroller.
Record highs were set in the quarter for new registrations of RVs, but much of this increase was due to the time for registering new RVs with an older emission class ended in February. Disregarding this partly administrative effect, Thule estimated the market still grew with around 10 percent, and that the company continued to outperform the market.
Sport & Cargo Carriers and Packs, Bags & Luggage performed in line with 2017, Thule said.
In terms of geographic markets, Thule said it drove growth particularly in the Nordic region, France and Australia, due to new customers in a number of categories in these markets.
In the Americas, sales declined by 4 percent in the quarter. The decline in sales was due to the ongoing phase-out in the U.S. of a number of low margin OE contracts, which had been announced previously. These OE contracts relate to accessories for pick-up trucks sub-category in the Sport & Cargo Carriers category, and simpler bags and cases in the Packs, Bags & Luggage category.
In addition to the known sales decrease attributable to the OE contracts, the start of 2018 has “also been relatively slow for retailers in the Sport & Outdoor channel.” However, Thule said “its assessment is that this is not indicative of consumers’ interest in its products for the year as a whole, and is instead more due to caution among retailers ahead of the peak season in a continued turbulent US market.”
The Active with Kids category grew “very fast even in the Americas, mainly due to strong sales of strollers and child bike seats. Brazil and Canada were the strongest markets in the region,” according to Thule.
Reduced sales of OE products with lower margins in the US, combined with continued growth in Active with Kids and more profitable bags, resulted in improved profitability in the region.
Raw material costs overall remained relativity high, but a positive product and customer mix together with the new 2018 prices for customers resulted in the gross margin rising 0.3 percent after currency adjustment for the quarter.
Said Magnus Welander, CEO and president, in a statement, “The personnel in all of the group’s assembly plants are working in line with plans to increase capacity ahead of the peak spring season. To ensure a steady and cost-efficient ramp-up ahead of the peak season, we took a conscious decision to increase the inventory of high-volume products. At the end of the quarter, the inventory totaled SEK 981m (SEK 902m for Q1, 2017) and comprised products we are sure will be sold during.
“Our heavy investment in product development continues and in the spring and summer we are both launching a broad range of innovative products in retail and introducing new products to trade that will be launched to consumers in 2019. Together with our efficient production and distribution as well as our strong global brand, this means that I am optimistic about the year ahead.”
