Thule Group reported earnings declined 25.5 percent in the second quarter as sales were down 11.6 percent. Highlights of the quarter include:

  • Net sales for the quarter amounted to SEK 2,043m (2,311) corresponding to a decrease of 11.6 percent. Adjusted for exchange rate fluctuations, sales declined 12.3 percent.
  • Operating income amounted to SEK 430m (558) corresponding to a decrease of 23.0 percent and a margin of 21.0 percent (24.1). 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).
  • Earnings-per-share, before dilution, amounted to SEK 3.02 (4.06).
  • COVID-19 had a significant negative impact on sales in the quarter.

The full statement from Thule Group’s CEO and President, Magnus Welander, (read here) described the quarter as “exceptional in many respects primarily due to the massive lockdowns in its 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 lockdowns, 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 an operating income of SEK 430m (558) for the quarter. In addition, we generated an improved cash flow compared with the prior year of SEK 523m (431).”

Region Europe & ROW — Positive End To The Quarter; Major Differences Between Countries And Categories 
During the quarter, sales in the region declined by 12 percent after currency adjustment. Welander said, “Similar to the situation at the end of the first quarter, the 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.

Region Americas — Very Strong End To The Quarter, Driven By Bike Category
In Region Americas, sales declined by 12 percent in the quarter after currency adjustment. Welander said, “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.

Focus On Rapid Adjustments, Long-Term Approach In Continued Uncertain Market
Welander said, “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 COVID-19 creates much uncertainty, but we believe in our long-term approach with great products for active people.

“We continue to push an aggressive product development agenda to drive future growth. During the autumn, 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.”

Photo courtesy Thule Group