Thule Group AB reported its first quarter sales reached SEK1.37 billion ($165 mm), up 27.1 percent, or 11.5 percent in currency-neutral (c-n) terms as strong growth in Europe and the Rest of the World greatly outpaced growth in the Americas.
The Swedish manufacturer of car racks, car-top boxes, baby joggers, backpacks and other cargo carrying gear reported EBIT increased 34.8 percent to SEK210 million ($25 mm) or 15.4 percent of sales, up 90 basis points. Adjusted for exchange rate fluctuations, underlying EBIT rose 35.4 percent.
Net income for the period grew 184.4 percent to SEK142 million ($17 mm). Earnings per diluted share reached SEK1.42, up 54.3 percent from SEK0.92.
Positive currency effects contributed to the increased net sales, while the cost of goods sold was negatively affected by the fact that goods purchased mainly in U.S. dollars were sold primarily in the European market. Accordingly, currency effects were slightly negative for underlying EBIT during the quarter, as they had been a year earlier.
Cash flow from operations was a negative SEK151 million (-$18 mm), up from negative SEK125 in the first quarter of 2014.
In the Outdoor&Bags segment, sales increased by 23.2 percent during the quarter (9.0 percent c-n). Sales to Europe and the rest of the world (Europe & ROW) grew 21.1 percent (12.8 percent c-n). In the Americas region, sales increased by 28.1 percent (1.3 percent c-n). Underlying EBIT increased by 20.5 percent (20.8 percent c-n).
Demand lags in the Americas
“In the Americas region, the trend in the sport and outdoor market was slightly weaker,” said Thule Group President and CEO Magnus Welander. “In addition, in this region, the Bags for Electronic Devices category accounts for a larger proportion of our sales than it does in Europe & ROW and, as previously announced, we expect the new products launched in autumn 2014 and those being launched in spring 2015 in this category to be able to start creating growth in the second half of 2015.”
In Thule's Specialty segment, sales increased by 65.2 percent during the quarter (33.4 percent c-n) thanks primarily to snow chain sales in Europe. Following a full year with extremely little snow in 2014, in the Central European markets winter conditions normalized in the first quarter which translated into increased sales. Underlying EBIT increased to SEK16 million, compared to a 6 percent decline in the first quarter of 2014.
Thule's new Eastern European distribution center went operational in January 2015 and will enable more efficient distribution to the Eastern European market from the second half of 2015. Steps were also initiated during the quarter for a new distribution structure in Western Europe which, among other things, means that Thule Group will close a warehouse for bags and cases in Belgium in the second quarter of 2015 and move those operations to a third-party warehouse in the Netherlands.