Thule Group reported its second consecutive fourth quarter and full-year downtrend in 2023, with the fourth quarter, the company’s smallest reporting period, affected by a sharp downturn in its RV business and the full year further impacted by weak first-half results.
Net sales for the fourth quarter amounted to SEK 1.57 billion, down 5.2 percent or 5.6 percent in currency-neutral terms (CN), compared to SEK 1.65 percent in the corresponding 2022 quarter. The company said the expected sales decrease in RV Products, driven by a slower period for the RV industry, had a significant negative impact on the quarter. New Thule products primarily drove growth.
The company launched sales via thule.com in Austria and Spain during the quarter, which reportedly contributed immediately to growth in the DTC channel.
The gross margin improved to 37.2 percent of sales in the fourth quarter, compared to SEK 31.5 percent in the prior-year quarter.
Operating income (EBIT) was reported at SEK 53 million, or 3.4 percent of net sales, in Q4, compared to SEK 4.0 million, or 0.2 percent of net sales, in the prior-year corresponding quarter. The operating margin increased 280 basis points when adjusted for FX rate fluctuations.
In the fourth quarter, Thule’s swing to net income totaled SEK 24 million, or SEK 0.23 per share, from a loss of SEK 16 million. Or a loss of SEK 0.15 per share in the 2022 fourth quarter.
Cash flow from operating activities totaled SEK 276 million in the fourth quarter, reported to be one of the strongest for the company in a fourth quarter, compared to cash flow from operating activities of SEK 110 million in the prior-year period.
The Board of Directors proposed a dividend of SEK 9.50 per share, which, based on the number of shares outstanding on February 9, 2024, corresponds to a dividend of SEK 1.00 billion.
After the fourth quarter, I can confirm that Thule is doing well, even in a tough market,” said President and CEO Mattias Ankarberg in a note to investors. “With the exception of RV Products, we delivered growth in both regions, good profitability and a very strong cash flow. New Thule products continue to drive growth, even in a weak market. This is reassuring since we have just entered the biggest launch year in Thule Group’s history!”
Full Year Results
Net sales for the full year were reported as SEK 9.13 billion in 2023, a 9.9 percent decrease compared to SEK 10.14 billion in 2022. Adjusted for FX rate fluctuations, sales declined 15.2 percent for the year. The company said sales decreased significantly during the first half of the year, and, with that, also profitability. The trend improved during the year’s second half when sales aligned with the previous year.
Operating Income (EBIT) amounted to SEK 1.51 billion in 2023, compared to SEK 1.71 billion in 2022, corresponding to a margin of 16.5 percent of net sales this past year, a 30 basis-point decline from a margin of 16.8 percent of net sales in 2022. Adjusted for FX rate fluctuations, the operating margin decreased by 0.8 percentage points year-over-year.
Net income for the year was SEK 1.10 billion, or SEK 10.45, compared to SEK 1.28 billion, or SEK 12.19 per share, in 2022.
Cash flow from operating activities totaled SEK 1.85 billion in 2023, compared to SEK 616 million in 2022.
“We are investing more in product development than ever in the company’s history, corresponding to 6.9 percent of sales for the year,” Ankarberg shared. “Cash flow from operating activities was very strong and totaled SEK 1.85 billion. We have focused on reducing inventory levels, and I’m pleased that this has resulted in a year-on-year decrease of SEK 801 million.” Ankarberg said this means that Thule well-exceeded its goal to reduce inventory by SEK 600 million for the year.
Ankarberg wrapped up his comments with a forward look stating, “To reach our financial targets, we need to grow faster than we have historically.”
Moving forward, Ankarberg said Thule would address several growth opportunities at the same time and focus on four areas:
- Continue to invest in product development. “We have a long history of developing new and improved products that drive profitable growth.”
- Increase focus on succeeding in several product categories simultaneously. “Short-term priorities are clear. in 2024, we are launching dog transport products and car seats.”
- Increase visibility for consumers. “We know that many of our customers genuinely appreciate our products, but few know about our entire offering.”
- Increase efficiency and capacity utilization in the supply chain. “We will exit several external warehouse services and plan to decrease inventory levels by an additional SEK 200m in 2024.”
Image courtesy Thule Group