Accell Group N.V. reported that bike sales in May rebounded after weak March and April sales. The Dutch company also said it had arranged “an additional credit facility as a precautionary action to secure robust access to liquidity in light of the uncertainty and volatility caused by the COVID-19 pandemic.”
Due to the various lockdowns and subsequent shop closures in several countries, Accell reported group revenue in March and April down approximately 27 percent compared to last year. Shops started to reopen at the end of April in Germany, which is the company’s largest market. In the second week of May, the majority of all bike shops in Europe reopened. Consequently, group revenue grew 23 percent in May compared to last year resulting in a 5 percent decline in year-to-date (YTD) net sales through May.
Based on its lower YTD net sales which “entailed some adverse mix effects and due to higher costs related to the supply chain disruptions” due to COVID-19, EBIT came in at €28 million, approximately 40 percent below last year’s level through the comp period.
“In order to meet the surging demand for e-bikes, e-MTBs and e-cargo bikes in our markets, we have increased production again from 30 percent in March to 70-to-80 percent of capacity taking into account the social distance requirements for staff within our production facilities. As earlier indicated, we anticipate ongoing global supply chain disruptions caused by the COVID-19 outbreak to hamper product availability in the second half of 2020 and to cause delays in the planned introductions of new bicycle models,” Accell reported in a release.
The Company said the rebound of bike sales in May, combined with cash management measures implemented since the end of March, has resulted in an improved cash position. Still, given that the bicycle business is typically seasonal and to ensure sufficient funding headroom going forward in a still unpredictable environment, Accell said they have agreed to an additional two-year amortizing bank facility of €115 million with its bank consortium under the Dutch GO-C scheme. The facility will be partly drawn in 2020 (€60 million), and the remainder is available until April 1, 2021. Accell said it mainly serves as an extra financial buffer in the case the impact of COVID-19 lasts longer and becomes more severe. Dividend limitations will be applicable as long as the GO-C is drawn and, as a consequence, no dividend will be distributed over the 2020 financial year. In addition, regarding the existing facilities provided by its bank consortium, the Company has agreed to amended terms for the financial covenants and availability of the seasonal revolving credit facility (extending the seasonal facility from July 15 until December 1, 2020).
Ton Anbeek, CEO Accell Group, in a statement said, “The strong recovery of bike sales in May is clearly a very positive development yet we are still trailing behind last year’s numbers. The duration and impact of COVID-19 currently remain unpredictable, and we anticipate that our 2020 results will be hampered by the ongoing disruptions in the global supply chain. The current uncertain environment requires us to be more prudent, and this is also why we are glad to have improved our financial buffer. At the same time, we are excited to see so many European governments, cities and consumers embrace cycling post lockdown, which contributes to a bright future for our brands and our business in the post-COVID-19 era.”
Photo courtesy Accell
