In its first earnings report since going public last fall, Thule Group AG reported sales from continuing operations grew 5.6 percent to SEK976 million ($131 mm) during the fourth quarter despite a sharp drop in snow chain sales in Europe.
The Swedish company said exchange rates boosted sales by SEK85 million in the quarter ended Dec. 21. In currency-neutral (c-n) terms, sales declined 3.3 percent.
Sales grew 10.2 percent to SEK328 million in the Americas, or negative 3.5 c-n.. In Europe and the Rest of the World, sales grew 12.2 percent (6.0 percent c-n) to SEK481 million.
Thule attributed the overall decline in revenue primarily to its Specialty segment, where sales fell SEK37 million, or 32.7 percent, to SEK76.0 million due primarily to lower snow chain sales in Central Europe, where snowfall was unseasonably low. The Specialty segment also sells pick-up truck boxes.
Sales in the Outdoor & Bags segment increased 11.4 percent (1.9 percent c-n) during the quarter and 10.0 percent, or 5.1 c-n, for the full year. The growth came primarily from Europe, where the company saw strong sales of Sport & Cargo carriers, multifunctional carriers and new products, such as child bicycle seats and bicycle trailers. Sales in the United States declined due to fewer promotional offers for Case Logic laptop sleeves and lower demand for its camera bags.
Gross margins grew 130 basis points to 34.5 percent thanks large to more favorable product and channel mix.
Underlying EBIT, which excludes discontinued operations, declined to SEK37 million ($5 mm) from SEK45 million in the fourth quarter of 2013, primarily due to the lower sales at Specialty and higher than expected expenses related to the development and launch of new strollers, backpacks and other products that will hit retail this spring as part of a major expansion into new categories. Full-year underlying EBIT increased 16.7 percent to SEK686 million ($92 mm), or 14.6 percent of net sales, up 10 basis points from a year earlier.
Net loss for the quarter, when Thule sales reach a low point, increased to SEK100 million ($15 mm) million during the quarter, resulting in earnings per share of negative SEK1.11 compared with -SEK0.62 a year earlier. The increase was attributed primarily to non-recurring items, including SEK24 million in IPO related expenses and SEK24 million from restructuring and merger costs. For the full year, Thule reported net income of SEK2.32 million, or SEK2.32 per share, down 34.5 percent from SEK3.54 million, or SEK3.54 per share, in 2013.
The company ended the year with net debt of SEK2.55 billion ($373 mm), down 41.2 percent from a year earlier. Inventories amounted to SEK795 million, up 18.8 percent, which Thule attributed mainly to exchange rates and stocking a substantial number of new products for the Spring 2015 launch.
Thule Group went public Nov. 26 after divesting its trailer and towing divisions so it could focus on the sports and recreation markets. Its shares are now listed on Nasdaq Stockholm.
