Lafuma Group Returns to the Black in the First Half

Lafuma Group of France returned to the black in the first half of 2014, according to Calida Group, which acquired control of the outdoor and action sports apparel company last year. Thanks to the acquisition, Calida reported consolidated sales more than doubled year-on-year to CHF197.4 million ($221 mm), while the operating result (EBIT) and net result were also much higher.

Calida reported the reorganization of Lafuma in France is more or less complete, and the enlarged Calida Group has now been organized into five divisions. Even after investing  CHF63.1 million to acquire a majority stake in the Lafuma Group, which is still listed on Euronext, Calida Group still has net cash and cash equivalents of CHF 15.3 million.

Calida Group spent the first half of 2014 integrating Lafuma and reinforcing organizational structures to facilitate management of a business made much larger and more complex by the acquisition.

We acquired a majority stake in Lafuma Group, which had been making a loss, as a strategic investment in 2013. We have managed, as planned, to restructure and stabilize Lafuma quickly and comprehensively. We have streamlined the company and this has already led to a positive operating result in the first half year of 2014, says Felix Sulzberger, CEO of the Calida Group.

Acquisition-driven group growth

The Calida Groups consolidated sales more than doubled as a result of the acquisition, growing by 110.6 percent from CHF 93.7 million to CHF 197.4 million. The operating result (EBIT) increased by 49.7 percent from CHF 6.1 million to CHF 9.1 million.

The net result was 16.6 percent higher at CHF 5.2 million. Integration of the newly acquired brands and business units progressed as planned; the reorganization and restructuring of Lafuma in France is largely completed.

Operating cash flow for the Calida Group as a whole was virtually neutral at CHF -0.9 million despite CHF 8.6 million of restructuring costs in France in the first half of 2014 and the seasonal spike in inventories in the middle of the year.

Even after investing a total of  CHF 63.1 million in the acquisition of a 59.9 percent stake in the Lafuma Group, the Calida Group still has net cash and cash equivalents of CHF 15.3 million and thus remains net debt-free.
 

The enlarged Calida Group is organized into five divisions: the Calida Division, based in Sursee, the Aubade Division based in Paris,  the Millet Mountain Group, with its Millet, Eider and Lafuma Outdoor brands, based in Annecy, the Oxbow Division based in Bordeaux and the Furniture Division based in Anneyron.

Lafuma Group: Streamlining

The Lafuma Group achieved sales of  CHF85.5 million ($96 mm) during period under review, compared with  CHF 96.3 million in the same period of 2013. This  CHF 10.8 million, or 11.2 percent, dip in sales is the result of the new strategy that aims to return Lafuma to a positive operating result. Following a large operating loss of CHF 54.2 million (excluding one- off costs:  CHF4.8 million) for the first six months of 2013, Lafuma already achieved a positive operating result of  CHF1.5 million in the first half of 2014. Excluding one-off costs, the operating profit came to  CHF1.7 million, which is an improvement of CHF6.5 million on the first half of 2013.

The turnaround at the Lafuma Group, which had been making a loss in recent years, has therefore already come a long way.

The largest division in the Lafuma Group, the Millet Mountain Group, posted sales of  CHF 41.3 million during the period under review, thus accounting for 20.9 percent of overall Calida Group sales.
 
The Oxbow Division had to be thoroughly restructured. Half-year sales went down from  CHF19.4 million to  CHF15.8 million ($18 mm)  in line with strategy, but OXBOW is already making a positive contribution to group profits. Its sales accounted for 8.0 percent of the group total.

The Furniture Division, which produces garden and camping furniture under the Lafuma Mobilier brand had an extremely positive first half of 2014, with sales rising 5.4 percent to  CHF27.1 million ($30mm). Exports to other European countries were particularly healthy. The Furniture Division contributed around 10 percent of group sales. It is a profitable division and delivers a solid contribution to overall group earnings.

Outlook for the year: confident

With a positive result for the first half year and healthy order books, the much enlarged Calida Group is confident about prospects for 2014 as a whole despite the subdued economic outlook.