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Thule Group — Interim / Quarterly Report 2014
Feb 9, 2015
2983_10-k_2015-02-09_82ad1565-e906-46e0-99dc-f0f0d5f88638.pdf
Interim / Quarterly Report
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Year-end report, fourth quarter, October-December 2014
Fourth Quarter
- The Thule Group was listed through an initial public offering on November 26 on the Nasdaq Stockholm Mid Cap list under the ticker: THULE.
- Net sales1 for the quarter amounted to SEK 976m (924) corresponding to an increase of 5.6 percent. Adjusted for exchange-rate fluctuations, sales declined 3.3 percent.
- Underlying EBIT1 amounted to SEK 37m (45), corresponding to an operating margin of 3.8 percent (4.9). Operating income (EBIT)1 was a negative SEK 21m (30) and net income1for the period was a negative SEK 100m (- 52).
- Earnings per share before and after dilution1 amounted to negative SEK 1.11 (- 0.62).
Full year
- The strategic realignment of Thule Group as a consumer brand company in the sport and outdoor industry has been completed. Thule Group's Trailer Division and Towing Division were divested in 2014 and are reported as discontinued operations.
- Net sales1 for the full year amounted to SEK 4,693m (4,331) corresponding to an increase of 8.4 percent. Adjusted for exchange-rate fluctuations, sales rose 3.5 percent.
- Underlying EBIT1 amounted to SEK 686m (588), corresponding to an operating margin of 14.6 percent (13.6). Operating income1 totaled SEK 599m (514) and net income1for the period was SEK 199m (299).
- Cash flow from operating activities for total operations2 was SEK 355m (390).
- Earnings per share before and after dilution1 amounted to SEK 2.32 (3.54).
- The Board of Directors proposes a dividend of SEK 2.00 per share for 2014 to be distributed over two payment dates, SEK 1.00 in May and SEK 1.00 in October.
| Oct-Dec 2014 |
Oct-Dec 2013 |
% | Jan-Dec 2014 |
Jan-Dec 2013 |
% | |
|---|---|---|---|---|---|---|
| Net sales, SEKm1 | 976 | 924 | +5.6 | 4 693 | 4 331 | +8.4 |
| Underlying EBIT, SEKm1 | 37 | 45 | -18.5 | 686 | 588 | +16.7 |
| Operating income (EBIT), SEKm1 | -21 | 30 | -168.2 | 599 | 514 | +16.5 |
| Net income, SEKm1 | -100 | -52 | -91.6 | 199 | 299 | -33.3 |
| Earnings per share, SEK1 | -1.11 | -0.62 | -79.0 | 2,32 | 3,54 | -34.5 |
| Cash flow from operating activities, SEKm2 | -77 | 106 | -172.6 | 355 | 390 | -9.0 |
1 Based on continuing operations, excluding operations discontinued during 2014. Correspondingly, the comparison periods have been divided into continuing and discontinued operations.
2 Based on total operations, meaning both continuing and discontinued operations.
CEO's comments
Strategic realignment as a leading, global sport and outdoor company
In recent years, we have strengthened the Thule Group's position as a leading company in the sport and leisure industry. During the year, the strategic focus on brand-driven consumer products led to the divestment of the Trailer Division and the Towing Division. These divestments allow a more focused investment in continued growth in the Outdoor&Bags segment.
Continued growth in Outdoor&Bags
The sport and leisure market continued to post a positive trend and we reported growth of 6 percent during the quarter. In the Outdoor&Bags segment, sales increased 11.4 percent during the quarter (1.9 percent after currency adjustment) and 10.0 percent for the full year (5.1 percent after currency adjustment).
The Thule Group's sales during the quarter were positively impacted by exchange-rate effects of SEK 85m.After currency adjustment, sales declined 3.3 percent, primarily attributable to weak sales of snow chains in the Specialty segment (SEK 76m for the quarter compared with SEK 113m for the year-earlier period), due to limited snowfalls in Central Europe.
Underlying EBIT declined to SEK 37m (45), primarily attributable to increased expenses associated with product development and the launch of a broad range of entirely new product areas ahead of the 2015 season. For the full year, underlying EBIT was SEK 686m (588), up 16.7 percent and with a margin of 14.6 percent (13.6) for 2014.
Extremely positive response to launches
In the fourth quarter, we worked actively with our customers at the retailer level with follow up of the successful introductions of new products that we exhibited at the major international trade fairs in the second and third quarters ahead of the 2015 season. This year, these fairs were particularly exciting for us, since, we presented in addition to a wide range of new products in the categories where we are market leader,a wide range of products in a number of new product categories.
Retailers from around the world responded extremely positively to the launches, which included:
- The Active with Kids segment sport strollers, child bike seats, bicycle trailers and multifunctional child carriers.
-
Bags for sport and travel backpacks for outdoor life, bike transport cases and bike bags.
-
Cases/sleeves for home electronics –new models for cellphones, tablets and laptops.
- The Case Logic brand revitalization with a large number of new products with modern design.
More efficient distribution and increased investment in testing
During the quarter, the construction continued of a distribution center in Eastern Europe, adjacent to our largest assembly plant in Huta, Poland. The warehouse, which entails an investment of more than SEK 60m, went operational in January 2015 and will enable more efficient distribution to the Eastern European market.
During the quarter, expansion continued of the Thule Test Center in Hillerstorp, Sweden, which by autumn 2015, will have doubled our testing capacity and, thereby, further strengthened our market leading position in safety.
Stock exchange listing
During the quarter, Thule was listed on Nasdaq Stockholm, under the ticker: THULE. I am proud of the substantial interest that was shown by investors and pleased to be able to welcome many new shareholders to the Thule Group.
In conjunction with the stock exchange listing, a new five-year loan facility was arranged that will, over time, reduce our borrowing costs and secure our operational flexibility. At the same time, previous loans were redeemed and together with the listing costs this meant that we posted a negative cash flow for the quarter of SEK 77m.
At an overall level, I can state that our strategy remains firm and we intend to continue driving profitable growth in the Outdoor&Bags and Specialty segments, in which we offer products that make it easier for people all over the world to live an active life.
Magnus Welander, CEO and President
Financial overview3
Trend for the fourth quarter
Net sales
In the fourth quarter of 2014, net sales totaled SEK 976m (924), corresponding to an increase of 5.6 percent, primarily attributable to new product launches and higher sales in the Outdoor & Bags segment. Adjusted for exchange-rate fluctuations, net sales for the Group declined 3.3 percent, mainly due to lower sales of snow chains in the Specialty segment.
In the Outdoor & Bags segment, sales increased primarily in Europe while, to some extent, sales in the US were negatively impacted in the quarter within the product category bags and cases for electronic devices. This was mainly due that we had fewer major promotional offers for our laptop sleeves under the brand Case Logic, than the preceding year, and that our sales of camera bags were negatively impacted by a weaker market for cameras.
| Oct-Dec | Jan-Dec | |
|---|---|---|
| Change in net sales | 2014 | 2014 |
| Changes in exchange rates | 8.9% | 4.9% |
| Structural changes | 0.0% | 0.0% |
| Organic growth | -3.3% | 3.5% |
| Total | 5.6% | 8.4% |
Gross income
Gross income totaled SEK 337m (306), corresponding to a gross margin of 34.5 percent (33.2). Gross income was positively impacted by a favorable change in the product and channel mix.
Operating income
Operating income amounted to negative SEK 21m (30). Underlying EBIT amounted to SEK 37m (45), corresponding to an operating margin of 3.8 percent (4.9). Operating income for the quarter was negatively impacted, primarily by increased expenses for product development and the launches of a broad range of products in a number of new product categories. These products will be available to consumers in the first six months of 2015.
Changes in exchange rates had an overall positive impact of about SEK 5m on operating income, compared with the fourth quarter of 2013.
Items affecting comparability
In the fourth quarter, items affecting comparability were an expense of SEK 52m (expense: 10). Expenses pertain to listing costs of SEK 24m, restructuring costs of SEK 7m related to the Specialty segment (snow chains), SEK 7m for the merger of support functions in US operations, SEK 10m from the closure of the company's warehouse in Gembloux, Belgium and a provision of SEK 4m for potential environmental measures at the plant in Hillerstorp, Sweden.
Net financial items
The net interest expense was SEK 109m (63). Net financial items were negatively impacted by exchange-rate differences for loans and cash and cash equivalents of SEK 53m (- 28) and the impairment of capitalized financing costs for earlier financing of SEK 19m. The interest expense for borrowings was SEK 40m, of which SEK 37m was attributable to funding that was in place prior to the listing and SEK 3m to new funding following the listing.
3 Unless otherwise stated, the overview pertains to continuing operations excluding the Trailer and Towing divisions, which were discontinued in 2014. Correspondingly, the comparison periods have been divided into continuing and discontinued operations. Comparative figures pertain to the corresponding year-earlier period.
Net income from continuing operations for the period
In the fourth quarter of 2014, net income from continuing operations totaled a negative SEK 100m (- 52), corresponding to earnings per share of negative SEK 1.11 from continuing operations (before and after dilution).
Trend for the full year
Net sales
Net sales for the full-year 2014 amounted to SEK 4,693m (4,331) corresponding to an increase of 8.4 percent. Adjusted for exchange-rate fluctuations, net sales for the Group rose 3.5 percent.
Net sales for the full year were driven by the Outdoor & Bags segment, where sales grew SEK 380m, corresponding to an increase of 10.0 percent (up 5.1 percent after currency adjustment). Growth was particularly robust in the Europe and ROW region where sales increased SEK 332m due to a positive trend in most markets.
Net sales in the Specialty segment declined SEK 19m for the full year, corresponding to a decrease of 3.8 percent (down 8.4 percent after currency adjustment), due to extremely limited snowfall in Central European markets where the company sells snow chains. For the year, sales posted a year-on-year decline of SEK 42m for the snow chains product category, which means that 2014 was the year with the lowest sales of snow chains since the Thule Group started operations in this product category in 2004.
Gross income
Gross income amounted to SEK 1,832m (1,616) corresponding to a gross margin of 39.0 percent (37.3). Gross income was positively impacted, primarily by a favorable change in the product and channel mix.
Operating income
Operating income totaled SEK 599m (514). Underlying EBIT totaled SEK 686m (588), corresponding to an operating margin of 14.6 percent (13.6). Operating income was positively impacted by higher net sales, primarily, but also by improved gross margins. Changes in exchange rates had an overall positive impact of about SEK 45m on operating income, compared with 2013.
Items affecting comparability
For the full-year 2014, items affecting comparability amounted to an expense of SEK 70m (expense: 56). Expenses pertain primarily to listing expenses of SEK 32m, restructuring expenses of SEK 9m related to the Specialty segment (snow chains), SEK 9m for the merger of support functions and closure of a factory in US operations, SEK 11m from the closure of the company's warehouse in Gembloux, Belgium and a provision of SEK 4m for potential environmental measures at the plant in Hillerstorp, Sweden.
Net financial items
The net interest expense was SEK 324m (expense: 102). Net financial items were negatively impacted by exchange-rate differences of SEK 132m (positive: 22) on loans and cash and cash equivalents, and by finanancial derivatives of SEK 3m (61).
Taxes
Tax for the full year amounted to an expense of SEK 75m (expense: 114), corresponding to a tax rate of 27 percent (28) on income before tax (21 percent excluding extra provisions for the tax dispute in Germany). See also, Note 5 Taxes.
Net income from continuing operations
For the full-year 2014, net income from continuing operations totaled SEK 199m (299), corresponding to earnings per share of SEK 2.32 (3.54) from continuing operations before and after dilution.
Net income from discontinued operations
Discontinued operations comprise net income from the Trailer and Towing divisions, which previously comprised the Towing operating segment. The Trailer Division was divested in May 2014 and the Towing Division was deconsolidated in September 2014. In the second quarter, a SEK 350m impairment of goodwill was made in relation to the towing operations' estimated net realizable value. The capital gain from these divestments was SEK 1m.
Cash flow from total operations
Cash flow for the fourth quarter
Cash flow from operating activities in the fourth quarter was a negative SEK 77m (106). The downturn was attributable to the slight decline in operating income and net financial items. Investments in tangible and intangible assets amounted to an expense of SEK 31m (expense: 34).
Cash flow for the full year
Cash flow from operating activities was SEK 355m (390) for the year. For the full year, investments in tangible and intangible assets totaled SEK 173m (101). Cash flow for the year was positively impacted by the divestment of the Trailer and Towing operations.
During the year, new issues were made totaling SEK 993m.
Premiums paid in on the issue of stock options totaled SEK 12m. For further information, please refer to the Related-party transactions section.
During the year, loans corresponding to SEK 4,542m (274) were repaid and new loans raised corresponding to SEK 2,300m in long-term bank loans and utilization of SEK 250m in a revolving credit facility.
In conjunction with the listing of the Thule Group, refinancing of the Group was carried out, whereby the previous financing agreement was terminated and a new five-year financing agreement entered into. The new agreement is a syndicated agreement comprising a framework of SEK 2,300m in long-term bank loans and SEK 600m in a revolving credit facility.
Financial position
At December 31, 2014, the Group's equity amounted to SEK 2,966m (1,802). The Group's assets and liabilities have changed during 2014 due to the divestment of the Trailer and Towing divisions. For additional information, refer to Note 3 Discontinued operations.
At December 31, 2014, net debt amounted to SEK 2,546m (4,335). Total long-term borrowing amounted to SEK 2,376m (4,436), comprising loans from credit institutions of SEK 2,390m (4,403), gross, and capitalized financing costs of SEK 14m (34). Total current financial liabilities amounted to SEK 292m (288) and mainly comprised utilized revolving credit facilities.
| SEKm | Dec 31 2014 | Dec 31 2013 |
|---|---|---|
| Long-term loans, gross | 2 390 | 4 403 |
| Short-term loans, gross | 254 | 249 |
| Overdraft facilities | 4 | 7 |
| Financial derivative instruments | 26 | 93 |
| Capitalized financing costs | -14 | -34 |
| Accrued interest | 0 | 2 |
| Gross debt | 2 660 | 4 720 |
| Cash and cash equivalents | -114 | -385 |
| Net debt | 2 546 | 4 335 |
The table pertains to total operations
Pledged assets for the Thule Group amounted to SEK 28m (7,084).
At December 31, 2014, goodwill amounted to SEK 4,038m. At December 31, 2013, goodwill pertaining to continuing operations totaled SEK 3,642m. The increase was fully attributable to currency effects.
At December 31, 2014, inventories amounted to SEK 795m. At December 31, 2013, inventories pertaining to continuing operations amounted to SEK 669m. The change was mainly due to negative exchange rates and inventory accumulations ahead of the 2015 season, when a substantial number of new products will be launched.
Other information
Strategic restructuring
In recent years, the Thule Group's position as a leading company in the sport and leisure industry has strengthened. The company's strategic focus on brand-driven consumer products continued during the year through divestment of the Towing Division and the Trailer Division with deconsolidation from May and September 2014 respectively.
These changes will enable the Thule Group to focus time and resources on implementing the company's long-term growth strategy for its segments: Outdoor&Bags (mainly products for transporting sport and leisure products, such as bicycles, skis and water sport carriers, various types of bags and a range of solutions for living an active life with children) and Specialty (mainly snow chains and transport solutions for pick-up trucks).
Seasonal variations
The Thule Group's sales and operating income are partially affected by seasonal variations. During the first quarter, sales are mainly affected in the Specialty segment (snow chains), depending on winter conditions. In the second and third quarters, primarily Outdoor & Bags, is impacted by how early the spring or summer arrives, while sales in individual quarters may be impacted by the quarter in which spring or summer occurs. In the fourth quarter, seasonal variations are primarily attributable to sales of winter-related products (such as snow chains and roof boxes), and sales of products in the Outdoor & Bags segment's bag category prior to major holidays.
Employees
The average number of employees in continuing operations was 2,128 (2,208).
Related-party transactions
As of September 30, Thule contracted to divest its shares in Brink Group B.V., the parent company of the Towing Division, to Thule Group AB's existing shareholders. The transfer was carried out at the market price for the operations, which was estimated at EUR 77m.
At the extraordinary general meeting of Thule Group AB on November 12, a resolution was passed to issue warrants as part of an incentive program for the management and the Chairman of the Board. Warrants have been issued to and subscribed for by Thule Group AB's subsidiary Thule AB.
Events after the balance-sheet date
No significant events that could impact the operations occurred after the end of the reporting period.
The Thule Group share
On November 26, the Thule Group was listed on the Nasdaq Stockholm Mid Cap list. The total number of shares in issue was 100,000,000.
Proposed dividend
For 2014, the Board of Directors proposes a dividend of SEK 2.00 per share for 2014. It is also proposed that dividends will be paid in two installments for a better adaptation to the Group's cash flow profile.
The proposed record date for the first dividend payment of SEK 1.00 is May 4, 2015 and the record date for the second payment of SEK 1.00 is proposed as October 9, 2015.
Shareholders
At December 31, 2014, Thule Group AB had 2,104 shareholders. At this date, the largest shareholders were NC Outdoor VI AB (corresponding to 38.9 percent of the votes), NC Outdoor VII AB (corresponding to 25.4 percent of the votes) and
AMF – Försäkring och Fonder (corresponding to 7.8 percent of the votes).
Annual General Meeting
The Annual General Meeting for the Thule Group is scheduled for Wednesday, April 29, 2015 in Malmö, Sweden.
Parent Company
Thule Group AB's principal activity pertains to head office functions such as Group-wide management and administration. The comments below refer to the period January 1-December 31, 2014. The Parent Company invoices its costs to Group companies. The Parent Company reported negative earnings of SEK 368m (0).
During the year, the Parent Company sold its shareholding in Brink Group B.V., which is the parent company of the companies included in the divested towing operations. This generated a capital loss of SEK 368m. A new financing agreement was signed in conjunction with the listing of Thule Group AB's shares. Previous financing agreements were signed by subsidiaries. Cash and cash equivalents and current investments amounted to SEK 0m (34). Long-term liabilities to credit institutions totaled SEK 2,363m (0).
The Parent Company's financial position is dependent on the financial position and development of its subsidiaries. The Parent Company is therefore indirectly impacted by the risks described in the Risks and uncertainties section.
Performance by business segment
Outdoor & Bags
| Oct-Dec | Change | Jan-Dec | Change | |||||
|---|---|---|---|---|---|---|---|---|
| SEKm | 2014 | 2013 | Rep. | Adjust.1 | 2014 | 2013 | Rep. | Adjust.1 |
| Net sales | 809 | 726 | 11.4% | 1.9% | 4 205 | 3 824 | 10.0% | 5.1% |
| - Region Europe & ROW | 481 | 429 | 12.2% | 6.0% | 2 761 | 2 430 | 13.6% | 8.4% |
| - Region Americas | 328 | 298 | 10.2% | -3.5% | 1 443 | 1 394 | 3.5% | -0.7% |
| Operating income | 25 | 34 | -24.6% | 734 | 598 | 22.8% | ||
| Underlying EBIT | 47 | 47 | 1.5% | -5.2% | 774 | 665 | 16.3% | 8.8% |
| Operating margin, % | 3.1% | 4.6% | 17.4% | 15.6% | ||||
| Underlying EBIT margin, % | 5.8% | 6.4% | 18.4% | 17.4% |
1 Adjustment for changes in exchange rates
In the fourth quarter of 2014, net sales in Outdoor&Bags rose to SEK 809m (726), corresponding to an increase of 11 percent. Adjusted for exchange-rate fluctuations, net sales rose 2 percent. Sales in this business segment grew mainly due to a strong trend in Europe, particularly in the Sport&Cargo Carriers product categories and Other Outdoor&Bags. In the Other Outdoor&Bags category, we noted strong sales of multifunctional child carriers but, also, of new products, such as child bike seats and bicycle trailers.
In the North American market, the trend within the product category of bags and cases for electronic devices was weak. This was mainly due that we had fewer major promotional offers for our laptop sleeves under the brand Case Logic, than the preceding year, and that our sales of camera bags were negatively impacted by a weaker market for cameras.
Net sales for the full-year 2014 amounted to SEK 4,205m (3,824), corresponding to an increase of 10 percent. Adjusted for exchange-rate fluctuations, net sales rose 5 percent.
In the fourth quarter of 2014, underlying EBIT totaled SEK 47m (47). Changes in exchange rates positively impacted operating income by a net amount of SEK 3m compared with the year earlier. During the quarter, overheads increased, primarily due to increased expenses for product development and launches for a number of new product categories ahead of the 2015 season, which added SEK 20m in overheads compared with the year-earlier period. The launches were extremely positively received and included:
- The "Active with Kids" segment sport strollers, child bike seats, bicycle trailers for children and multifunctional child carriers.
- Bags for sport and travel backpacks for outdoor life and bike bags.
- Sleeves and cases for home electronics new case models for cellphones, tablets and laptops.
For the full-year 2014, underlying EBIT totaled SEK 774m (665), which means that the EBIT margin was 18.4 percent (17.4).
Thule Urban Glide – one of the company's new sport strollers launched during the quarter.
Specialty
| Oct-Dec | Change Jan-Dec |
Change | ||||||
|---|---|---|---|---|---|---|---|---|
| SEKm | 2014 | 2013 | Rep. | Adjust.1 | 2014 | 2013 | Rep. | Adjust.1 |
| Net sales | 166 | 198 | -15.9% | -22.5% | 487 | 506 | -3.8% | -8.4% |
| - Snow Chains | 76 | 113 | -33.2% | -36.3% | 136 | 178 | -23.4% | -27.1% |
| - Work Gear | 91 | 84 | 7.3% | -5.2% | 351 | 328 | 7.0% | 1.9% |
| Operating income | 3 | 34 | -92.0% | -3 | 31 -109.4% | |||
| Underlying EBIT | 12 | 34 | -65.6% | -67.4% | 6 | 31 | -79.9% | -80.1% |
| Operating margin, % | 1.7% | 17.4% | -0.6% | 6.1% | ||||
| Underlying EBIT margin, % | 7.1% | 17.4% | 1.3% | 6.1% |
1 Adjustment for changes in exchange rates
In the fourth quarter of 2014, net sales in Specialty totaled SEK 166m (198), corresponding to a decrease of 16 percent. Adjusted for exchange-rate fluctuations, net sales declined 23 percent. Net sales in the Work Gear product category declined marginally in local currency compared with the year earlier, since one of our US customers, on our advice, made a downward adjustment of their inventory levels while sales for snow chains declined 36 percent after currency adjustment, due to extremely limited snowfall in the Central European markets where we sell snow chains.
Net sales for the full-year 2014 totaled SEK 487m (506), where Work Gear posted increased sales of products for building professionals (mainly toolboxes for pick-up trucks) in the North American market with net sales of SEK 351m (328). However, sales of snow chains were negatively impacted, mainly due to the snow-free winter in Europe in the first and fourth quarters. For the year, net sales posted a year-on-year decline of SEK 42m for the snow chains product category, which means that 2014 was the year with the lowest sales of snow chains since the Thule Group started operations in this product category in 2004.
In the fourth quarter of 2014, underlying EBIT totaled SEK 12m (34) and the margin amounted to 7.1 percent (17.4). The decline in operating income was primarily attributable to decreased sales of snow chains. Changes in exchange rates had a positive impact of SEK 2m on earnings, compared with the preceding year.
For the full-year 2014, underlying EBIT was SEK 6m (31).
The Board of Directors and the President provide their assurance that this year-end report provides a fair and accurate view of the Group's and the Parent Company's operations, financial position and earnings, and describes the material risks and uncertainties faced by the Parent Company and other companies in the Group.
February 12, 2015
Board of Directors
Review report
This report has not been reviewed by the company's auditor.
A selection of product launches during the period
Examples of products from two of the company's new product areas: Thule Atmos X3, a protective case for smartphones (available in stores from the first quarter of 2014) and the Thule Capstone backpacks for outdoor activities (available in stores from spring 2015).
Examples of product launches during the quarter in the Sport&Cargo Carrier segment: Thule Trail carrier basket.
Financial reports
(Unless otherwise stated, all amounts are in SEKm)
Consolidated Income Statement
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| Note | 2014 | 2013 | 2014 | 2013 | |
| Continuing operations | |||||
| Net sales | 2 | 976 | 924 | 4 693 | 4 331 |
| Cost of goods sold | -640 | -618 | -2 861 | -2 715 | |
| Gross income | 337 | 306 | 1 832 | 1 616 | |
| Other operating revenue | 0 | 3 | 5 | 10 | |
| Selling expenses | 1 | -259 | -202 | -897 | -797 |
| Administrative expenses | -84 | -80 | -298 | -301 | |
| Other operating expenses | -14 | 3 | -44 | -14 | |
| Operating income | 2 | -21 | 30 | 599 | 514 |
| Net interest expense/income | -109 | -63 | -324 | -102 | |
| Income before taxes | -130 | -32 | 275 | 413 | |
| Taxes | 5 | 30 | -20 | -75 | -114 |
| Net income | -100 | -52 | 199 | 299 | |
| Discontinued operations | |||||
| Net income from discontinued operations | 3 | 29 | -279 | -340 | -237 |
| Consolidated net income | -71 | -331 | -140 | 62 | |
| Consolidated net income pertaining to: | |||||
| Shareholders of Parent Company | -71 | -329 | -140 | 61 | |
| of which, pertaining to continuing operations | -100 | -52 | 199 | 299 | |
| of which, pertaining to discontinued operations | 29 | -277 | -340 | -238 | |
| Non-controlling interest (pertaining to discontinued operations) | 0 | -2 | 0 | 1 | |
| Consolidated net income | -71 | -331 | -140 | 62 | |
| Earnings per share, SEK (before and after dilution) | -0.79 | -3.90 | -1.63 | 0.72 | |
| Earnings per share from continuing operations, SEK (before and after dilution) | -1.11 | -0.62 | 2.32 | 3.54 | |
| Average number of shares (millions) | 90.1 | 84.5 | 85.9 | 84.5 |
Consolidated Statement of Comprehensive Income
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| Consolidated net income | -71 | -331 | -140 | 62 | |
| Items that have been carried over or can be carried over to consolidated net income |
|||||
| Foreign currency translation | 107 | 91 | 241 | 76 | |
| Cash-flow hedges | -24 | -1 | -26 | 1 | |
| Net investment hedge | 49 | -18 | 82 | -64 | |
| Translation differences from foreign currency translation and net investments recognized in consolidated net income |
-5 | 0 | 23 | 0 | |
| Tax on components in other comprehensive income | -6 | 4 | -13 | 14 | |
| Tax on components in other comprehensive income recognized in consolidated net income | 0 | 0 | 17 | 0 | |
| Items that cannot be carried over to consolidated net income | |||||
| Revaluation of defined-benefit pension plans | -15 | 8 | -24 | 44 | |
| Tax pertaining to items that cannot be carried over to consolidated net income | 4 | 0 | 6 | -8 | |
| Other comprehensive income | 108 | 84 | 304 | 63 | |
| Total comprehensive income | 37 | -247 | 164 | 125 | |
| Total comprehensive income pertaining to: | |||||
| Shareholders of Parent Company | 37 | -245 | 164 | 124 | |
| Non-controlling interest (pertaining to discontinued operations) | 0 | -2 | 0 | 1 | |
| Total comprehensive income | 37 | -247 | 164 | 125 |
Consolidated Balance Sheet
| Dec 31 | Dec 312 | |
|---|---|---|
| 2014 | 2013 | |
| Assets | ||
| Intangible assets | 4 082 | 4 441 |
| Tangible assets | 559 | 891 |
| Long-term receivables | 6 | 5 |
| Deferred tax receivables | 520 | 478 |
| Total fixed assets | 5 167 | 5 815 |
| Inventories | 795 | 921 |
| Tax receivables | 11 | 15 |
| Accounts receivable | 754 | 803 |
| Prepaid expenses and accrued income | 52 | 42 |
| Other receivables | 60 | 54 |
| Cash and cash equivalents | 114 | 385 |
| Total current assets | 1 785 | 2 220 |
| Total assets | 6 952 | 8 035 |
| Equity and liabilities | ||
| Equity | 2 966 | 1 802 |
| Long-term interest-bearing liabilities | 2 376 | 4 436 |
| Pension provisions | 136 | 135 |
| Deferred income tax liabilities | 154 | 185 |
| Total long-term liabilities | 2 665 | 4 756 |
| Short-term interest-bearing liabilities | 292 | 288 |
| Accounts payable | 497 | 511 |
| Income taxes | 69 | 46 |
| Other liabilities | 28 | 28 |
| Accrued expenses and deferred income | 327 | 532 |
| Provisions | 107 | 72 |
| Total short-term liabilities | 1 321 | 1 477 |
| Total liabilities | 3 986 | 6 233 |
| Total equity and liabilities | 6 952 | 8 035 |
2 Pertains to total operations, meaning both continuing and discontinued operations.
Consolidated Statement of Changes in Equity
| Dec 31 | ||||||
|---|---|---|---|---|---|---|
| 2014 | 2013 | |||||
| Equity attributable to shareholders of Parent Company |
Non-controlling interest |
Total equity | Equity attributable to shareholders of Parent Company |
Non-controlling interest |
Total equity | |
| Opening balance, January 1 | 1 797 | 5 | 1 802 | 1 673 | 4 | 1 678 |
| Consolidated net income | -140 | -140 | 61 | 1 | 62 | |
| Total other comprehensive income | 304 | 304 | 63 | 63 | ||
| Total comprehensive income | 164 | 164 | 124 | 1 | 125 | |
| Transactions with the Group's owners | 1 005 | -5 | 1 000 | |||
| Closing balance | 2 966 | 0 | 2 966 | 1 797 | 5 | 1 802 |
Consolidated Statement of Cash Flow2
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| Income before taxes | -130 | -32 | 275 | 413 | |
| Income from discontinued operations before taxes | 26 | -272 | -326 | -224 | |
| Adjustments for items not included in cash flow | -52 | 378 | 500 | 379 | |
| Paid income taxes | -10 | -21 | -55 | -49 | |
| Cash flow from operating activities prior to changes in working capital | -166 | 54 | 394 | 520 | |
| Cash flow from changes in working capital | |||||
| Increase(-)/Decrease (+) in inventories | -55 | 37 | -66 | -53 | |
| Increase(-)/Decrease (+) in receivables | 8 | 51 | -156 | 108 | |
| Increase(+)/Decrease (-) in liabilities | 136 | -36 | 183 | -185 | |
| Cash flow from operating activities | -77 | 106 | 355 | 390 | |
| Investing activities | |||||
| Business combinations, net impact on liquidity | 0 | 0 | 0 | -60 | |
| Sale of subsidiaries | 337 | 0 | 527 | 0 | |
| Acquisition of intangible assets | -1 | -5 | -15 | -5 | |
| Acquisition of tangible assets | -30 | -29 | -158 | -96 | |
| Divestment of tangible assets | 0 | 1 | 0 | 1 | |
| Cash flow from investing activities | 306 | -33 | 354 | -160 | |
| Financing activities | |||||
| New issue of shares | 1 004 | 0 | 1 005 | 0 | |
| Borrowings | 2 550 | 0 | 2 550 | 0 | |
| Debt repaid | -4 390 | -69 | -4 542 | -274 | |
| Cash flow from financing activities | -836 | -69 | -987 | -274 | |
| Net cash flow | -607 | 4 | -278 | -44 | |
| Cash and cash equivalents at beginning of period | 719 | 383 | 385 | 433 | |
| Effect of exchange rates on cash and cash equivalents | 2 | -2 | 7 | -4 | |
| Cash and cash equivalents at end of period | 114 | 385 | 114 | 385 |
2 Pertains to total operations, meaning both continuing and discontinued operations.
Parent Company Income Statement
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | ||
| Other operating revenue | 6 | 0 | 9 | 0 | |
| Other operating expenses | -24 | 0 | -400 | 0 | |
| Administrative expenses | -6 | 0 | -9 | 0 | |
| Operating income | -24 | 0 | -400 | 0 | |
| Net interest expense/income | 1 | 0 | 1 | 0 | |
| Income before taxes | -23 | 0 | -399 | 0 | |
| Appropriations | 31 | 0 | 31 | 0 | |
| Taxes | 0 | 0 | 0 | 0 | |
| Net income | 8 | 0 | -368 | 0 |
Parent Company Balance Sheet
| Dec 31 | Dec 31 | |
|---|---|---|
| 2014 | 2013 | |
| Assets | ||
| Financial fixed assets | 4 971 | 1 000 |
| Total fixed assets | 4 971 | 1 000 |
| Other current receivables | 50 | 0 |
| Cash and cash equivalents | 0 | 34 |
| Total current assets | 50 | 34 |
| Total assets | 5 021 | 1 034 |
| Equity and liabilities | ||
| Equity | 1 670 | 1 034 |
| Liabilities to credit institutions | 2 363 | 0 |
| Liabilities to Group companies | 368 | 0 |
| Total long-term liabilities | 2 731 | 0 |
| Liabilities to credit institutions | 250 | 0 |
| Other current receivables | 370 | 0 |
| Total short-term liabilities | 620 | 0 |
| Total equity and liabilities | 5 021 | 1 034 |
| Pledged assets | 0 | 1 034 |
| Contingent liabilities | Inga | Inga |
Disclosures, accounting policies and risk factors
Note 1 Accounting policies
This condensed consolidated year-end report has been prepared in accordance with IAS 34, Interim Financial Reporting, and the applicable provisions of the Swedish Annual Accounts Act. The year-end report for the Parent Company has been prepared in accordance with Chapter 9 of the Swedish Annual Accounts Act on interim financial reporting. The same accounting policies and calculation methods have been applied for the Group and Parent Company as in the most recent Annual Report, with the exception of changes to the functional classification of operating expenses, which are described below. Other new and revised IFRSs that became effective in 2014 have had no material impact on the Group's earnings and financial position.
In connection with the Group's revised business focus in 2014, the functional classification of operating expenses was reviewed and adapted. The change primarily entails that the "Research and development" function has been removed and mainly allocated to the Sales function. The change was implemented retroactively with restatement of the comparative periods. Operating income was not affected by changes to the functional classification. However, the consolidated income statement has also been impacted by discontinued operations, which, in accordance with IFRS 5, have been reported separately on a line at the foot of the income statement. Correspondingly, the comparison periods have been divided into continuing and discontinued operations. Amounts before adjustments therefore pertain to the functions of continuing operations.
| Continuing operations | Oct 1-Dec 31 2013 | Jan 1-Dec 31 2013 | ||||||
|---|---|---|---|---|---|---|---|---|
| Before | After | Before | After | |||||
| adjust. | Adjust. | adjust. | adjust. | Adjust. | adjust. | |||
| Selling expenses | -144 | -58 | -202 | -616 | -181 | -797 | ||
| Research and development expenses | -58 | 58 | 0 | -181 | 181 | 0 |
Note 2 Operating segments
In 2014, the Thule Group implemented a reorganization that affected governance and monitoring, as well as classification of the Group as operating segments (business segments). Prior to the reorganization, there were two operating segments: Outdoor&Bags and Towing. The Towing segment was discontinued in 2014 through the divestment of the Trailer and the Towing operations. In Outdoor&Bags, operations in the snow chain product group and the toolboxes for pick-up trucks (Work Gear) product group in the US have now been transferred to the new operating segment known as Specialty.
The former Towing operating segment is reported as a discontinued operation. See Note 3 Discontinued operations. Comparative figures for the preceding year have been regrouped according to the new classification as operating segments, and the Towing operations have been excluded retroactively.
Net sales and operating income per segment
| Outdoor&Bags | Specialty | Group-wide | Eliminations | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Oct - Dec | Oct - Dec | Oct - Dec | Oct - Dec | Oct - Dec | |||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||
| Sales to customers | 809 | 726 | 166 | 198 | 0 | 0 | 976 | 924 | |||
| Intercompany sales | 4 | 3 | 0 | 0 | 0 | 0 | -4 | -3 | 0 | 0 | |
| Underlying EBITDA | 60 | 57 | 16 | 38 | -22 | -35 | 53 | 60 | |||
| Operating depreciation/amortization | -12 | -10 | -4 | -4 | -1 | -1 | -17 | -15 | |||
| Underlying EBIT | 47 | 47 | 12 | 34 | -23 | -36 | 37 | 45 | |||
| Other depreciation/amortization | -3 | -3 | 0 | 0 | -2 | -2 | -5 | -4 | |||
| Items affecting comparability | -19 | -10 | -9 | 0 | -24 | 0 | -52 | -10 | |||
| Operating income | 25 | 34 | 3 | 34 | -49 | -38 | -21 | 30 | |||
| Net interest expense/income | -109 | -63 | |||||||||
| Taxes | 30 | -20 | |||||||||
| Net income from discontinued operations | 29 | -279 | |||||||||
| Consolidated net income | -71 | -331 |
| Outdoor&Bags | Specialty | Group-wide | Eliminations | Group | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Jan - Dec | Jan - Dec | Jan - Dec | Jan - Dec | Jan - Dec | ||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |
| Sales to customers | 4 205 | 3 824 | 487 | 506 | 1 | 1 | 4 693 | 4 331 | ||
| Intercompany sales | 16 | 17 | -1 | 3 | -16 | -19 | 0 | 0 | ||
| Underlying EBITDA | 818 | 704 | 19 | 44 | -91 | -104 | 747 | 644 | ||
| Operating depreciation/amortization | -45 | -39 | -13 | -13 | -3 | -4 | -61 | -57 | ||
| Underlying EBIT | 774 | 665 | 6 | 31 | -94 | -108 | 686 | 588 | ||
| Other depreciation/amortization | -11 | -12 | 0 | 0 | -6 | -6 | -18 | -18 | ||
| Items affecting comparability | -29 | -56 | -9 | 0 | -32 | 0 | -70 | -56 | ||
| Operating income | 734 | 598 | -3 | 31 | -132 | -114 | 599 | 514 | ||
| Net interest expense/income | -324 | -102 | ||||||||
| Taxes | -75 | -114 | ||||||||
| Net income from discontinued operations | -340 | -237 | ||||||||
| Consolidated net income | -140 | 62 |
Note 3 Discontinued operations
| Jan - Dec | ||
|---|---|---|
| 2014 | 2013 | |
| Revenue | 913 | 1 372 |
| Expenses | -890 | -1 346 |
| Goodwill impairment | -350 | -250 |
| Income before taxes | -327 | -223 |
| Taxes | -13 | -14 |
| Realization gain/loss from divestment of discontinued operations | 1 | 0 |
| Net income from discontinued operations | -340 | -237 |
| Earnings per share, discontinued operations, SEK (before and after dilution) | -3.95 | -2.82 |
| Jan - Dec | ||
|---|---|---|
| 2014 | 2013 | |
| Cash flow from discontinued operations | ||
| Operating cash flow before investments | 57 | 143 |
| Operating cash flow after investments | 14 | 48 |
Note 4 Fair value of financial instruments
| Fair value | ||
|---|---|---|
| Dec 31 | Dec 31 | |
| 2014 | 2013 | |
| Assets - Financial derivatives | ||
| Currency forward contracts | 0 | 0 |
| Currency swaps | 4 | 5 |
| Currency options | 4 | 0 |
| Total derivative assets | 8 | 5 |
| Liabilities - Financial derivatives | ||
| Currency forward contracts | -23 | -1 |
| Currency swaps | -3 | -6 |
| Currency options | -7 | -2 |
| Interest-rate swaps | 0 | -89 |
| Commodity derivatives | 0 | 0 |
| Total derivative liabilities | -34 | -98 |
The carrying amount is considered to be an approximation of the fair value for all financial assets and liabilities. The Group's long-term liabilities are subject to floating interest rates, which means that changes in the basic interest rate will have no significant impact on the fair value of the liabilities. According to the company's assessment, neither have there been any changes in the credit margins that would significantly impact the fair value of the liabilities. The financial instruments valued at fair value in the balance sheet consist of derivative instruments that are held to hedge the Group's exposure to interest rates, currency rates and raw-material prices. All derivatives belong to Level 2 of the hierarchy for measuring fair value as described in IFRS 13.
Note 5 Taxes
The company is involved in an ongoing tax dispute in Germany and no further decisions were made on this matter during the year. During the year, the Group made an additional provision of SEK 19m (27), total provisions amounted to SEK 46m for tax/interest rates attributable to the above dispute. The effective tax rate for the period was 27.4 percent compared with 27.6 percent for the full-year 2013. The tax rates were impacted by the provisions made for the ongoing tax dispute in Germany. No other significant events affecting the Group's effective tax rate occurred during the January to December 2014 period.
Note 6 Risks and uncertainties
The Thule Group is an international company and its operations may be affected by a number of risk factors in the form of operational and financial risks. The operational risks are managed by the operational units and the financial risks by the central finance department. The operational risks comprise the overall economic trend, as well as consumption by both consumers and professional users, primarily in North America and Europe, where most of the Group's sales are conducted. An economic downturn in these markets could have a negative impact on the Group's sales and earnings. Changes in product technology and sales channel shifts could also affect the Group's sales and earnings negatively.
Demand for the Group's products is also partly dependent on the weather, particularly in the Specialty segment. A snowfree winter may reduce demand for such products as snow chains.
Thule's operations are also exposed to seasonal variations. Demand for consumer products for an active outdoor lifestyle (such as bike carriers or water sport-related products) is greatest during the warmer months of the year, while demand for cases for electronic products is greatest when schools start, at the end of the year and when new electronic products are launched. The Thule Group has adapted its production processes and supply chain in response to these variations.
Other relevant risk factors are disclosed in the prospectus Invitation to acquire shares in Thule Group AB and pertains to industry and market-related risks, operating risks and financial risks. No new risks have been identified compared with the prospectus.
Key figures
| Oct - Dec | Jan - Dec | |||||
|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |||
| Net sales, SEKm1 | 976 | 924 | 4 693 | 4 331 | ||
| Net sales growth, %1 | 5.6% | -1.5% | 8.4% | -0.7% | ||
| Net sales growth, adjusted %1 2 | -3.3% | -1.7% | 3.5% | 1.9% | ||
| Gross margin, %1 | 34.5% | 33.2% | 39.0% | 37.3% | ||
| Underlying EBIT, SEKm1 | 37 | 45 | 686 | 588 | ||
| Underlying EBIT margin, %1 | 3.8% | 4.9% | 14.6% | 13.6% | ||
| Operating income (EBIT), SEKm1 | -21 | 30 | 599 | 514 | ||
| Operating margin, %1 | -2.1% | 3.3% | 12.8% | 11.9% | ||
| Earnings per share, SEK1 | -1.11 | -0.62 | 2.32 | 3.54 | ||
| Earnings per share, SEK3 | -0.79 | -3.90 | -1.63 | 0.72 | ||
| Equity ratio, %1 4 | 42.7% | 22.4% | 42.7% | 22.4% | ||
| Working capital, SEKm1 4 | 755 | 1 031 | 755 | 1 031 | ||
| Debt/equity ratio1 4 | 3.4 | 5.4 | 3.4 | 5.4 | ||
| Average number of employees1 | 2 128 | 2 208 | 2 128 | 2 208 |
1 Continuing operations
2 Adjustment for changes in exchange rates
3 Total operations (incl. discontinued operations)
4 The comparative period pertains to total operations
Definitions
Continuing operations Comprises the Outdoor & Bags and Specialty operating segments.
Debt/equity ratio Net debt divided by the rolling twelve-month EBITDA.
Discontinued operations Comprises the former Towing operating segment, comprising trailer and towing operations.
Earnings per share Net income for the period divided by the average number of shares during the period.
EBIT (Earnings Before Interest and Taxes) Income before net financial items and taxes.
EBIT margin EBIT as a percentage of net sales.
EBITDA (Earnings before interest, taxes, depreciation and amortization) Income before net financial items, taxes and depreciation/amortization and impairment of tangible and intangible assets.
EBITDA margin EBITDA as a percentage of net sales.
Equity per share Equity divided by the number of shares at the end of the period.
Equity ratio Equity as a percentage of total assets.
Gross debt Total long and short-term borrowing including overdraft facilities, financial derivative instruments, capitalized financing costs and accrued interest.
Gross income Net sales less cost of goods sold.
Gross margin Gross income as a percentage of net sales.
Net debt Gross debt less cash and cash equivalents.
Net investments Investments in tangible and intangible assets adjusted for disposals.
Underlying EBITDA EBITDA exclusive items affecting comparability.
Underlying EBIT EBIT exclusive items affecting comparability and depreciation/amortization excess values.
Working capital Comprises inventories, tax receivables, accounts receivable, prepaid expenses and accrued income, other receivables, cash and cash equivalents less accounts payable, income tax liabilities, other liabilities, accrued expenses and deferred income and provisions.
Financial calendar
| Interim report, January-March 2015 | April 29, 2015 |
|---|---|
| Annual General Meeting | April 29, 2015 |
| Interim report April-June 2015 | July 22, 2015 |
| Interim report July-September 2015 | November 4, 2015 |
The Thule Group's Annual Report will be available at www.thulegroup.com from the week starting March 30, 2015.
Contacts
Fredrik Erlandsson, Senior Vice President Communications Tel: +46 (0)70-309 00 21, e-mail: [email protected] Lennart Mauritzson, CFO Tel: +46 (0)70-552 05 57, e-mail: [email protected]
About the Thule Group
The Thule Group is a world leader in products that help you transport anything you care for safely, easily, and in style so you are free to live your active life. Guided by the motto of Active Life, Simplified, the company offers products in two segments: Outdoor & Bags (includes equipment for bicycles, water and winter sports, roof boxes, bicycle trailers, sport strollers, child bike seats, computer and camera bags, backpacks and cases for cellphones and other digital equipment), as well as Specialty (snow chains and toolboxes for pick-up trucks).
The Thule Group has about 2,200 employees at ten production facilities and 26 sales offices worldwide. The Group's products are sold in 136 markets and in 2014, sales amounted to SEK 4.7 billion. www.thulegroup.com
Thule Group AB (publ) Fosievägen 13 SE-214 31 Malmö, Sweden Corp. Reg. No: 556770-6311 www.thulegroup.com