Thule, Inc. reported sales in the fourth quarter rose 15.0 percent, but operating profits declined 21.2 percent due to rising raw material and supply chain costs. Earnings grew in the year as sales jumped 33 percent.
Net sales for the quarter amounted to SEK 1,846 million against SEK 1,605 million, corresponding to an increase of 15.0 percent. Adjusted for exchange rate fluctuations, sales increased 14.3 percent.
Operating income in the quarter fell 21.2 percent to SEK 190 million from SEK 241 million, corresponding to a margin of 10.3 percent against 15.0 percent the prior year. Adjusted for exchange rate fluctuations, the operating margin decreased 4.6 percentage points.
Net income in the quarter declined 6 percent to SEK 154 million from SEK 164 million.
For the full year, net sales amounted to SEK 10,386 million against SEK 7,828 million, corresponding to an increase of 32.7 percent. Adjusted for exchange rate fluctuations, sales increased 37.7 percent.
Operating income climbed 47.0 percent to SEK 2,340 million from SEK 1,591 million, corresponding to an operating margin of 22.5 percent versus 20.3 percent last year. Adjusted for exchange rate fluctuations, the operating margin increased 2.0 percentage points. Net income rose 53.5 percent to SEK 1,790 million from SEK 1,166 million.
The quarterly statement from Magnus Welander, CEO and president, follows:
…A historically strong year
The very strong demand for our products continued during the fourth quarter, and we reached sales of SEK 10,386m for the full year. After currency adjustment, this represents growth of 38 percent compared with the previous year and growth of 56 percent over 2019, the year before the pandemic. Sales growth for the fourth quarter was 15 percent (14 percent after currency adjustment) compared with the very strong fourth quarter in the previous year.
More expensive raw materials, higher freight prices and increased sickness absences affected profitability during the second half of the year. Despite these negative factors, we improved the full-year EBIT margin to 22.5 percent, thanks to efficient cost controls and our scalability.
During the fourth quarter, the EBIT margin was 10.3 percent (15.0). Earnings were affected by significant cost increases compared to the very strong fourth quarter of 2020. Our mid-year price increases could not fully offset this negative effect. Additional price increases have therefore been implemented in the beginning of the current year.
During the year we presented new long-term sustainability ambitions and continued our efforts to reduce our climate impact and show strong social commitment. Despite strong growth at a challenging time in terms of access to materials, components and freight capacity we reduced our greenhouse gas emissions with one percent. It is very positive to note that we reduced emissions relative to sales with as much as 26 percent.
Positive In All Of Region Europe And RoW
During the quarter, sales in the region increased 8 percent after currency adjustment, compared with an exceptionally strong fourth quarter in the previous year. This means that full-year sales increased 34 percent after currency adjustment.
Growth in the largest three product categories was more than 30 percent during the year, compared with a strong 2020. Sales in the Packs, Bags and Luggage category, our smallest category, grew 6 percent. Geographically, growth was healthy in all markets.
The highest growth in terms of percentage came from some of the larger markets with the most stringent restrictions during the early stages of the pandemic in the spring and summer 2020.
Very Strong Growth In Region Americas
Sales in the region increased 27 percent in the fourth quarter after currency adjustment. Full-year sales increased 48 percent after currency adjustment.
Growth was very strong in all product categories and in all of the region’s markets. Of particular note is the growth of 54 percent in the largest product category, Sport and Cargo Carriers. The niche product offering in RV products also grew an entire 113 percent.
High Demand Requires Expanded Capacity
Currency-adjusted quarterly growth, compared with 2019, the year before the outbreak of the pandemic, was 45 percent, 48 percent, 75 percent and 62 percent. We also continue to see clear signals that the trend for leisure and vacation activities closer to home will remain strong. As a result, we’re investing significant resources to build additional production capacity, as previously announced.
During the quarter we built up inventory levels ahead of the spring, particularly in Europe, and we are also choosing to bring forward several capacity-related investments to ensure flexibility for this year and the future. This means that in 2022, we will invest about 5 percent of our turnover in expanding and renovating existing production facilities, which is higher than our historical levels.
Positive Market Situation With Some Supply Chain Challenges In The Near Future
We have continued to win market share thanks to our strong product portfolio, our global lifestyle brand and flexible production in and close to our major markets. I’m convinced that with this strong base, we will continue to generate good growth in 2022, in a generally positive market environment.
At the same time, the growth journey has to contend with a challenging business environment, where high prices for material and freight remain, as do a variety of disruptions in the supply chain.
I can also, on behalf of the entire company, promise that we are ready for another strong year of growth and an exciting future in the coming years, which we will present further at our capital markets day in May.
In closing, I’d like to thank all of my colleagues whose energy, expertise and persistence helped us deliver a historically strong year.
Photo courtesy Thule
