Accell Group N.V. booked full-year 2003 net profit of 9.2 million ($10.4 mm), a rise of 35% compared with 2002 net profit of 6.8 million ($6.4 mm). Turnover rose 12% to 289.6 million ($327.8 mm)compared to 2002 turnover of 259.4 million ($245.4 mm). Organic turnover growth came in at 6%. The strong performances were due to the increased turnover in high quality bicycles, bicycle parts and bicycle accessories, a good sales mix, and the contribution of Finnish company Tunturi, which Accell acquired in August 2003.
René Takens, Chairman of the Board of Management of Accell Group: “A consistent brand strategy, a focused use of marketing tools and continuous innovation geared to consumer demands have enabled us to book substantial profit growth for the fourth consecutive year. We are also pleased that this success is reflected in our share price. For 2004, we again expect to see further growth in turnover and earnings per share.”
Earnings per share and dividend
The earnings per share over the average number of outstanding shares amounted to 2.76 ($3.12) in 2003, a rise of 34% compared with the 2002 earnings per share of 2.06 ($1.95). Accell Group proposes a dividend of 1.30 ($1.47) per share, with the option of a payout in either cash or shares. The optional dividend enables Accell Group to apply a higher payout ratio, while maintaining a strong balance sheet for future acquisitions. The optional dividend corresponds with a dividend yield of 6.4%.
Important developments in 2003
Despite the continued generally low consumer confidence, bicycle consumers are consciously opting for high-quality products. This deliberate choice of consumers continues to be an important driving force behind the positive development of the demand for Accell Groups branded products. In 2003 the company also benefited from the favourable weather conditions. The sales mix was good and product margins improved, partly because the prices of bicycle parts have been falling from season to season due to the continued weakening of the US dollar and the Japanese yen.
In 2003, Accell Groups competitive position in Western Europe has again improved due to close cooperation with the professional trade and distributors focusing on the specialist bicycle shops, as well as the consistent strategy, regarding its strong brand portfolio which focuses on the middle and higher segments of the markets. Sophisticated management and maintenance of the brand portfolio was and continues to be one of the most important cornerstones of Accell Groups strategy.
In addition to organic growth, turnover and profit also increased through the acquisition of the Finnish company Tunturi, which is active in the production and sale of bicycles, bicycle accessories and fitness equipment (such as bicycle trainers and cross trainers).
The Netherlands
In 2003, Accell Group performed strongly on the stable Dutch market with its brands Batavus, Koga Miyata, Sparta en Loekie. A good product mix and an active market approach led to higher sales. Through numerous innovations and the launch of various new products, such as the Sparta ION series, a new generation of electric bicycles, Accell Group was able to strengthen its market position in the Netherlands.
Germany
In line with the continued depressed economic conditions, the German bicycle market was again under pressure in 2003. Winora maintained its position in the bicycle market. Winora subsidiary BikeParts, which concentrates on the sale of bicycle parts and accessories, increased its sales slightly. At Hercules, sales remained below the desired level last year.
France
In France, the role of the bicycle retail specialists is becoming more important. Lapierre responded well to this development and clearly improved its position in the top segment of the market for racing bikes and mountain bikes. By devoting continuous attention to quality and innovation, the Lapierre brand has become synonymous with top performance in sports and exclusivity.
Accell Groups Mercier brand has a strong position in the French wholesale market. Close cooperation with distributors, good design and continuous attention to products enabled Mercier to perform well last year.
Other countries
The market conditions in the other countries in which Accell Group is active did not change significantly in 2003. The acquisition of Tunturi turned Finland into an important bicycle market for Accell Group. The fact that Tunturi sells fitness equipment in several countries within and outside Europe has widened the geographical spread of Accell Groups turnover.
Financial position
The acquisition of Tunturi in August 2003 extended Accell Groups balance sheet; fixed assets, inventories and receivables all increased. Including the consolidated Tunturi, the balance sheet total amounted to EUR 134.9 million (2002: EUR 112.5 million). Solvency stood at 36% (2002: 38%). Inventory management and receivables management have been applied efficiently at existing companies.
Operational cash flow came in at 13.1 million ($14.8 mm) in 2003 versus 2002 operational cash flow of 9.6 million ($9.1 mm). Return on capital employed rose to 15.2% (2002: 14,1%) and financial expenses fell by 19% in 2003.
Strategy and outlook
In the medium and long term, the continued increase in the number of cycled kilometres for home to work and recreational purposes, the undiminished attention for healthy living, being fit and remaining fit, as well as the continued demand for products with a recognisable added value (innovative, comfortable and safe) continue to offer opportunities for Accell Groups strong brands. Concentration on these brands, intensive cooperation with the professional trade and targeted marketing at sales outlets and aimed at consumers will enable Accell Group to take advantage of these developments.
Internally, Accell Group will continue to devote the same attention to production and logistical processes. Size remains necessary to realise benefits in purchasing, production and marketing. In addition to organic growth, Accell Groups ambitions will also be realised via acquisitions that are in line with the companys focus on mobility over short distances, fitness and active recreation. Accell Group will therefore continue to look actively for acquisition candidates that fit the groups profile and brand portfolio.
The letter of intent signed early February for the acquisition of Veenendaal-based Juncker B.V., a trading company in bicycle parts and bicycle accessories, is an important step for Accell Group in its aim to increase its turnover in this specific segment. Its strong brand portfolio and the fact that distribution takes place almost exclusively through the retail specialists channel, makes Juncker an excellent fit with Accell Group. The possibility of cooperation with German company BikeParts will also enable Accell Group to realise synergies in fields such as portfolio management, logistics and purchasing.
Outlook 2004
For 2004, Accell Group is expecting little change in its relevant markets. Accell Group does not expect any great improvement in the economic environment. The situation within the company is stable and the financial basis is solid. The pre sales to dealers of new bicycle collections for 2004, launched in September and October, are so far according to expectations. The year 2004 will be Tunturis first full year as part of the Accell Group.
On the basis of the above-mentioned developments and the current healthy order portfolio the outlook is positive and, barring unforeseen circumstances, for 2004 Accell Group expects a further increase in turnover and earnings per share.
