Swedish helmet technology provider Mips saw its turnaround efforts pick up momentum again in the first quarter as the sharp declines of the last year began to taper off into less dramatic decreases.

Total net sales for the quarter ended March 31 decreased by 6 percent to SEK 83 million, compared to SEK 88 million in the year-ago comparative quarter. Organic growth amounted to a negative 6 percent year-over-year. 

The company reports in Swedish Krona (SEK).

The company said the decline came from tough comps against the 2023 first quarter, particularly in the snow sub-category, which had a proportionally heavier impact this quarter.

“The positive developments that we started to observe at the end of 2023 continued in most of our categories in the first quarter, which is typically the quietest season for Mips,” reported company president and CEO Max Strandwitz in his letter to investors.

The 2023 fourth quarter had a 15 percent decline in sales, the third quarter declined 32 percent and the 2023 second quarter shrank 51 percent versus the prior year comparative period.

“In our most important sub-category, Bike, the growth trend continued with a more normal start to the year,” Strandwitz shared. “There was growth in the Motorcycle category, too, and we’re happy to see that our sales initiatives with the major brands are starting to bear fruit. We also saw continued positive developments in the Safety category, with many new products certified and ready for sale during this spring, which will drive growth forward.

Strandwitz said that in line with the company’s long-term strategy, it continued its investment in product development and marketing.

“The costs associated with these activities, combined with lower net sales, had a negative effect on the profits in the first quarter,” Strandwitz noted.

Operating profit amounted to SEK 14 million for the quarter, a decrease of 12 percent year-over-year from SEK 15 million in Q1 2023. In the first quarter, the operating margin amounted to 16 percent of net sales, down 100 basis points from the 17 percent margin in Q1 last year.

Operating cash flow amounted to negative SEK 10 million, compared to negative SEK 42 in the prior-year period.

Helmet Category | Sport
For the second straight quarter, Mips delivered growth in the Bike sub-category and see helmet inventory levels with consumers and retailers have started to return to healthier levels.

Sales of Snow Sport helmets to consumers were solid, and the sub-category is generally still developing well.

“We didn’t achieve growth in the quarter, though, as we had strong comparative figures of 60 percent growth last year,” Strandwitz offered. “We remain positive about the long-term growth opportunities in this sub-category and believe there are good prospects for the next season as inventory levels are generally at normal levels.”

In the Equestrian sub-category, the Gothenburg Horse Show, one of the largest competitions in the world, was held during the first quarter, and Mips participated as the show’s Official Safety Partner for the second year in a row. Strandwitz said it was inspiring to interact with so many representatives from the world of equestrian sports and get confirmation that Mips enhanced its position in this small yet very important sub-category.

“Based on the market signals we’ve seen during the quarter, our assessment is that the large Bike sub-category will develop well in 2024,” said Strandwitz. “As we have previously communicated, we believe that inventory levels in the entire bike sector, at the helmet brands and retailers, have now largely normalized across the board. For that reason, after 18 months of major de-stocking by both helmet manufacturers and retail stores, we are now expecting our sales to resemble end-consumer market patterns more closely.”

Helmet Category | Motorcycle
Strandwitz said developments improved in the Motorcycle category compared to the last few quarters and the company delivered growth this quarter.

Strandwitz also said the company has seen inventories also returning to more normal levels in this category.

“We are happy that, after clearing their stocks of older models, a number of major helmet brands have now chosen to launch new helmet models equipped with Mips solutions developed during 2023,” Strandwitz shared. “Our focus going forward will still be on working efficiently and closely with the helmet brands to integrate our solutions and also launch even more solutions that we’ve developed recently for the sector, thereby driving sell-through volumes with our customers.”

During the spring, Mips announced a new partnership with the FIM Motorcross World Championship (MXGP) event organizer, where Mips will be the Official Safety Partner.

“We view this as an important platform for continuing to educate the world of motorsports in helmet safety and the risks associated with rotational motion,” Strandwitz said.

Helmet Category | Safety
In the Safety category, Mips said it had kept a good pace in launching partnerships with new customers and new helmet models together with these customers.

“The certification process for new helmet models has taken a longer time than we had anticipated a year or so ago,” Strandwitz noted. “Many important models have now been certified and we are looking forward to gradually increasing the volume in this category.”

The company’s collaboration with Husqvarna was launched in April, marking its entry into the market for forestry helmets. So far, Mips has launched partnerships with 16 different brands in the category, and last year it reportedly doubled the number of helmet models equipped with Mips’ safety system in the Safety category.

“Now that we have established a solid platform of strong partners, our focus in 2024 will be on driving volumes, and we look forward to an exciting year of growth,” Strandwitz said.

“While we are in the early stages of our recovery, we are satisfied with the progress we’ve made so far,” offered Strandwitz. “For instance, during the quarter, we have driven growth in most of our sub-categories despite the market remaining uncertain and challenging. Over and above that, we are still seeing a great deal of interest from our customers in developing new helmets equipped with Mips’ safety system in all three categories.”

The CEO said the company is convinced that it has the right long-term strategy, with a major focus on innovation and steadily building a well-recognized ingredient brand that makes it an essential partner to the helmet sector.

“This strategy will also underpin our long-term plan going forward and our journey towards achieving our financial targets,” Strandwitz concluded.

Image courtesy Mips