New Thule products reportedly continued to drive growth in the second quarter despite tough market conditions, and profitability was said to be “good” even with major investments in future growth.

The company launched its new product categories of dog transportation and car seats, which were under development for several years, and well received. To fill in an open opportunity, in July Thule acquired a German company that sells bike trailers for transporting water sport and other equipment.

Thule Group reported second quarter net sales amounted to SEK 3,099 million representing an increase of 2.3 percent from SEK 3,029 million in the 2023 second quarter. Adjusted for exchange rate fluctuations, net sales for the Group increased by 1.6 percent.

“In the second quarter sales increased by just under 2 percent (in constant currency) and by 4 percent during the first half year,” shared Mattias Ankarberg, president and CEO of the Thule Group. “The market continues to be challenging with a high level of promotional activity and cautious consumers.”

Ankarberg said the North American market continues to show few signs of recovery and remains more challenging than its European counterparts.

“The growth was driven by our many product launches and by bike-related products,” the CEO continued. “It is a sign of strength that Thule’s new premium products are driving sales growth even in these tough market conditions.”

Ankarberg said growth in Q2 was strongest within Packs, Bags and Luggage (+5 percent) and within Juvenile and Pet (+4 percent), while categories with limited new products and low price points were weaker.

“Sales declined somewhat in RV Products, with the industry experiencing a tough period. Ankarberg continued, “We continue to open sales via thule.com in an increasing number of countries, and this year’s launches in the Czech Republic and Poland immediately contributed to growth in the DTC channel.”

Regional Performance

Europe and Rest of World
Europe and Rest of World (RoW) region net sales totaled SEK 2,303 million (2,247) in the second quarter, up 2.5 percent, and up 1.8 percent after currency adjustment. Sales growth in the quarter was said to be mainly driven by bike-related products, new product launches in Juvenile and Pet and sales of Thule branded products in the Packs, Bags and Luggage product category. Sales declined in RV Products with the industry experiencing a weaker period. Thule continued to open own sales via thule.com in Europe, and the year’s launches in the Czech Republic and Poland reportedly contributed to growth in the DTC channel. Markets that performed well included the Nordic countries. Performance was weak in France and the UK.

Americas Region
Net sales in the Americas Region amounted to SEK 796 million (782), up 1.8 percent year-over-year, or up 1.0 percent after currency adjustment compared with the second quarter of 2023. The North American market continued to be challenging with a high level of promotional activity. Sales of bike-related products, Juvenile & Pet and Thule branded products in Packs, Bags and Luggage showed growth. RV products represented a small share of sales in this region. Growth was said to be “weak but positive” in the U.S., the largest single market, and Brazil.

Category Performance
Thule Group sales and operating income are normally affected by seasonal variations. Sales in the first and fourth quarters primarily concern sales of winter-related products, while sales in the second and third quarters primarily concern summer-related products. Thule Group has adapted its production processes and supply chain in response to these variations.

Sport and Cargo Carriers
Sales increased 1 percent after currency adjustment in the second quarter. The largest subcategory, bike carriers, increased while sales of rooftop tents declined. Sport and Cargo Carriers accounted for 62 percent of total sales.

RV Products
Currency-adjusted sales declined 1 percent in RV Products with the industry experiencing a weaker period. Sale to the aftermarket (dealers) increased slightly while sales to OE customers (manufacturers) declined. RV Products accounted for 16 percent of total sales in the quarter, with a focus on the European market.

Juvenile and Pet
Currency-adjusted sales increased 4 percent compared with the year-ago quarter. The increase in sales of strollers was said to be “strongly driven” by the launch of the upgraded version of the Thule Urban Glide 3 and Thule Urban Glide 4-wheel. The Thule Allax dog transportation crate, which was launched in the first quarter, performed well and in accordance with expectations. Car seats were also launched in Germany, Austria and Switzerland during the quarter. Juvenile and Pet accounted for 14 percent of total sales in the quarter.

Packs, Bags and Luggage
Currency-adjusted sales in the Packs, Bags and Luggage product category increased 5 percent year-on-year. Sales in the Thule brand’s product range have trended well driven by product launches and increased travel. However, sales declined for legacy products, which the company continues to actively phase out. Packs, Bags and Luggage accounted for 8 percent of total sales in the quarter.

Income Statement
Gross margin rose 80 basis points year-over-year to 44.4 percent of net sales in Q2, compared to 43.6 percent of sales in the 2023 second quarter. Gross income was reportedly impacted by a positive product mix and lower material costs.

Ankarberg said the second quarter gross margin was the “strongest ever for a single quarter.”

Operating income amounted to SEK 732 million, or 23.6 percent of net sales in the second quarter, compared to operating income of SEK 711 million, or an operating margin of 23.5 percent of net sales, in the year-ago quarter.

Operating income was said to be positively impacted by an improved gross margin and lower costs for external inventory management, but also by higher costs for product launches compared with the year-ago period.

The EBIT margin was 23.6 percent in the second quarter, up 10 basis points from the year-ago level.

“Despite the record number of product launches this year and therefore higher costs, EBIT was the highest ever for a second quarter with the exception of the pandemic years,” Ankarberg highlighted.

In the second quarter, net income was SEK 559 million, or SEK 5.28 per share, compared to net income of SEK 539 million, or SEK 5.14 per share, in the year-ago Q2 period.

Balance Sheet and Cash Management
Cash flow from operating activities in the quarter was SEK 879 million, compared to SEK 718 million in the 2023 Q2 period. Cash flow from operating activities before changes in working capital was SEK 628 million (SEK 656 in 2023 Q2) and cash flow from changes in working capital was SEK 252 million, compared with SEK 62 million in the year-ago period.

Cash flow from operating activities for the first six months was SEK 969 million, compared to SEK 737 million in first half 2023. Inventories declined SEK 491 million compared with the start of the year. Net investments in tangible and intangible assets amounted to SEK 149 million (SEK 107 million in H1 2023).

During the quarter, a dividend of SEK 502 million was distributed to the company’s shareholders and a new financing agreement was entered into.

As of June 30, 2024, the Group’s equity amounted to SEK 7,043 million (7,118). During the quarter, equity was impacted by the dividend of SEK 1,004 million resolved on by the AGM, of which SEK 502 million was distributed in the second quarter. The equity ratio amounted to 58.6 percent versus  55.9 percent in 2023.

On June 30, 2024, net debt amounted to SEK 1,753 million (2023: SEK 2,614M). Total long-term borrowing amounted to SEK 2,061 million (2,751), comprising loans from credit institutions of SEK 1,938 million (2023: 2,580M), gross, long-term lease liabilities of SEK 140 million (2023: 172M), capitalized financing costs of SEK 17 million (2023: 3M), and the long-term portion of financial derivatives of SEK 0.

Total current financial liabilities amounted to SEK 89 million (2023: SEK 136M) at quarter-end and comprised the short-term portion of financial derivatives and lease liabilities. Net debt declined during the first half of the year by SEK 253 million. Cash flow from operating activities positively contributed with SEK 969 million, while net investments of SEK 149 million and a dividend of SEK 502 million had a negative impact.

Thule Group has entered a new financing agreement with selected Nordic banks that replaces the agreement entered in June 2018. The new agreement, which came into force in the second quarter of 2024, is for a total financing amount of EUR 400 million and consists of a combination of a revolving credit facility of EUR 320 million and a long-term loan of EUR 80 million.

“We are happy to see the banks’ strong interest in supporting Thule’s growth journey,” the CEO offered. Inventory levels reportedly declined as planned.

New Category Contributions
In the first half of the year Thule launched two new product categories: dog transportation and child car seats.

“Our Thule Allax dog crate was launched in the first quarter, and our car seats were launched in Germany, Austria and Switzerland in May,” said Ankarberg. “We have actively focused on achieving a good start in selected countries and can now report a warm reception with international design awards for products in both categories, positive media exposure and strong distribution with the most important premium retailers.”

He said the long-term efforts to build leading market positions has therefore started.

“We are capturing market shares in dog crates and will launch a bike trailer for transporting dogs in the third quarter, with several other products in dog transportation to follow,” the CEO continued. “Our first car seat products will be launched in other European countries in the fourth quarter, and more products are under development for both the European and the North American market.”

Reacha Acquisition
At the start of July, Thule Group acquired the German company Reacha (good goods tegernsee Gmbh). The company reportedly has an innovative product design that makes it possible for consumers to cycle to the sea or a lake with a kayak, surfboard or stand up paddleboard (SUP) carried on a bike trailer.

“After the end of the second quarter, we acquired Reacha, a small but leading player in bike trailers for the transportation of water sport and other equipment,” Ankarberg noted. “The best products are often developed by true enthusiasts, and Reacha grew from its founder’s need to transport surfboards to the beaches along the French Atlantic coast. Today, bike trailers for transporting equipment is a small but rapidly growing category in Europe and in its infancy in North America. It is also a natural complement to our leading multisport and bike trailers for children. Reacha currently has annual sales of SEK 9 million and will be integrated in Thule’s brand and operations, providing us with a starting point for continued development.”

Reacha operations are based in Germany with the majority of sales in Europe. The company had sales of about SEK 9 million in 2023 and the purchase consideration was about SEK 11 million (incl net debt) with the possibility of an earn-out payment of a maximum of SEK 4 million based on the outcome for 2024.

“We continue to invest long-term in areas that create value for Thule: product development; more product categories; increased consumer visibility; and increased efficiency in our supply chain. More people also want to live active lives, a market trend that gives us a long-term tailwind,” Ankarberg reported.

“We are now in the middle of the important summer season with a high level of activity among consumers, customers and in our factories,” he continued. “We have many product launches ahead of us and more product categories to develop, and I am very much looking forward to a continued eventful year in 2024!”

Image courtesy Thule