AI assistant
Thule Group Interim / Quarterly Report 2019
2983_10-k_2020-02-12_8fc46e2e-72dc-434c-b983-1ce2f88f5eaf.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
Year-end report, fourth quarter, October–December 2019
Fourth Quarter
- Net sales for the quarter amounted to SEK 1,211m (1,157), corresponding to an increase of 4.7 percent. Adjusted for exchange rate fluctuations, sales rose 0.6 percent.
- Underlying EBIT1 amounted to SEK 71m (64), corresponding to an increase of 10.6 percent and a margin of 5.9 percent (5.5). Adjusted for exchange rate fluctuations, the margin declined 0.5 percentage points. Operating income1 amounted to SEK 47m (64) and was impacted by restructuring costs of SEK 24m.
- Net income1 was SEK 30m (44).
- Cash flow from operating activities totaled SEK 174m (16).
- Earnings per share before dilution amounted to SEK 0.29 (0.42).
- The acquisition of the operations of North America's leading player in roof rack mounted fishing rod vaults, Denver Outfitters, was completed on 30 December. The company had sales just below USD 1m in 2019 and the acquisition is not expected to have any material impact on Thule Group's total sales and earnings.
Full year
- Net sales for the full-year were SEK 7,038m (6,484) corresponding to an increase of 8.5 percent. Adjusted for exchange rate fluctuations, sales rose 3.9 percent.
- Underlying EBIT1 amounted to SEK 1,245m (1,164), corresponding to an increase of 7.0 percent and a margin of 17.7 percent (18.0). Adjusted for exchange rate fluctuations, the margin declined 0.7 percentage points. Operating income1 amounted to SEK 1,195m (1,163) and was impacted by a cost of SEK 25m pertaining to a product recall and by restructuring costs of SEK 24m.
- Net income1 was SEK 883m (837).
- Cash flow from operating activities totaled SEK 1,030m (606).
- Earnings per share before dilution amounted to SEK 8.56 (8.13).
- The Board of Directors proposes a dividend of SEK 7.50 per share, corresponding to SEK 774m based on the number of shares outstanding at February 12, 2020.
| Oct-Dec 2019 |
Oct-Dec 2018 |
% | Jan-Dec 2019 |
Jan-Dec 2018 |
% | |
|---|---|---|---|---|---|---|
| Net sales, SEKm | 1 211 | 1 157 | +4.7 | 7 038 | 6 484 | +8.5 |
| Underlying EBIT, SEKm | 71 | 64 | +10.6 | 1 245 | 1 164 | +7.0 |
| Operating income (EBIT), SEKm | 47 | 64 | -26.7 | 1 195 | 1 163 | +2.8 |
| Net income, SEKm | 30 | 44 | -31.6 | 883 | 837 | +5.5 |
| Earnings per share, SEK | 0.29 | 0.42 | -31.6 | 8.56 | 8.13 | +5.3 |
| Cash flow from operating activities, SEKm | 174 | 16 +1011.1 | 1 030 | 606 | +70.0 |
1 The comparative figures are not adjusted to include the effects of the new accounting standard IFRS 16 Leases. Refer to Note 1 to see the effects.
CEO's statement
Solid financial results and key building blocks for future growth
Sales in the fourth quarter rose SEK 54m to SEK 1,211m, which was in line with our expectations. This means that for the full year, our sales were SEK 7,038m (6,484) and we posted growth of 8.5 percent (3.9 percent after currency adjustment).
Underlying EBIT was SEK 71m (64) for the quarter and SEK 1,245m (1,164) for the full year. Operating cash flow also improved during the quarter and in 2019, we generated an operating cash flow of SEK 1,190m (802).
Even if 2019 can be summed up as a somewhat average year when considering financial results, I am very happy that the company delivered growth in all four product categories.
In 2019 we have successfully driven a number of initiatives to strengthen our competitive position and create a better platform for future profitable growth. The extensive lay-out changes and efficiency programs implemented during the year at six of our nine assembly plants are now in their final phases. We also continued our aggressive product development initiative with several major projects for coming years, and invested 6 percent of sales in product development.
Our strength is further underlined by the growth of 6 percent for the year in our core brand, Thule, which now accounts for 83 percent of sales.
Region Europe & ROW – stable growth
During the quarter, sales in the region rose 4.2 percent (after currency adjustment), which entails currency-adjusted growth of 6.1 percent for the year.
Particularly positive for the quarter, in terms of product categories, were the strong sales of roof boxes driven by the new premium roof box, Thule Vector.
The luggage category also grew strongly driven by the launch of the Thule Crossover 2 collection. RV Products continued to grow driven by positive market growth in the large German market, and the fact that we continue to capture market shares.
On the market front, the UK posted healthy growth and Eastern Europe, with the exception of Russia, continued to grow rapidly. Healthy growth in South-East Asia during the quarter was linked to the successful launches of luggage and bags in the region.
Region Americas – phase-out of low-margin OE contracts impacts small quarter
Sales in Region Americas declined 5.7 percent after currency adjustment, during the quarter, which gave a decrease of 1.2 percent for the full year.
The previously communicated phase-out of certain low-margin OE contracts in the US had a negative impact on sales of SEK 11m in the fourth quarter and accounted for half of the negative trend in the region. The full-year negative effect on sales of the now completed phase-out was SEK 50m.
Sales in the US continued to disappoint and, in addition to the above phase-out, were primarily affected by declining sales for simpler bags and cases. Canada delivered its best quarter for the year with strong growth in most categories, while sales in Latin America were in line with last year.
The announced reorganization in North America was completed during the quarter.
A small add-on acquisition in December
At the end of the year, we acquired the operations of the niche company Denver Outfitters, with sales of just below USD 1m, North America's leading player in roof rack mounted fishing rod vaults.
Just as the rooftop tents that were acquired at the end of 2018, these fishing rod vaults will be retailed in 2020 under the Thule brand.
Positive expectations for 2020
Our long-term strategy, with major investments in sustainable product development of fantastic products, building a strong global brand, costeffective assembly plants and efficient logistics leaves me convinced that we have an exciting year ahead of us.
Magnus Welander, CEO and President
Financial overview1
Trend for the fourth quarter
Net sales
In the fourth quarter of 2019, net sales amounted to SEK 1,211m (1,157), representing an increase of 4.7 percent. Adjusted for exchange rate fluctuations, net sales for the Group rose 0.6 percent.
In the Region Europe & ROW, net sales totaled SEK 797m (741), up 7.4 percent, and 4.2 percent after currency adjustments. Net sales in Region Americas amounted to SEK 414m (415), down 5.7 percent after currency adjustment year-on-year.
| Oct-Dec | Jan-Dec | |
|---|---|---|
| Change in net sales | 2019 | 2019 |
| Changes in exchange rates | 4.1% | 4.6% |
| Structural changes | 0.7% | 1.0% |
| Organic growth | -0.1% | 2.9% |
| Total | 4.7% | 8.5% |
Gross income
Gross income for the quarter totaled SEK 463m (437), corresponding to a gross margin of 38.2 percent (37.8). After currency adjustment, the margin increase totaled 0.2 percentage points.
Operating income
Underlying EBIT amounted to SEK 71m (64), corresponding to an operating margin of 5.9 percent (5.5). Changes in exchange rates had a positive impact of SEK 12m. Operating income totaled SEK 47m (64) and was impacted by restructuring costs of SEK 24m, mainly attributable to North America.
| Oct-Dec | Jan-Dec | |
|---|---|---|
| Change in underlying EBIT margin | ||
| Underlying EBIT 2019 | 71 | 1 245 |
| Underlying EBIT margin 2019 | 5.9% | 17.7% |
| Underlying EBIT 2018 | 64 | 1 164 |
| Underlying EBIT margin 2018 | 5.5% | 18.0% |
| Underlying EBIT 2018, currency adjusted | 76 | 1 247 |
| Underlying EBIT marginal 2018, currency adjusted | 6.3% | 18.4% |
| Change in underlying EBIT margin, currency adjusted , |
-0.5% | -0.7% |
Net financial items
In the quarter, net financial items amounted to an expense of SEK 14m (expense: 8). Exchange rate differences on loans and cash and cash equivalents were an expense of SEK 2m (expense: 1). The interest expense for borrowings was SEK 11m (expense: 7).
1 The comparative figures are not adjusted to include the effects of the new accounting standard IFRS 16 Leases. Refer to Note 1 to see the effects.
Net income for the period
In the fourth quarter, net income was SEK 30m, corresponding to earnings per share of SEK 0.29 before and after dilution. For the year-earlier period, net income totaled SEK 44m, corresponding to earnings per share of SEK 0.42 before and after dilution.
Trend for the full year
Net sales
Net sales for the full-year 2019 amounted to SEK 7,038m (6,484), corresponding to an increase of 8.5 percent. Adjusted for exchange rate fluctuations, net sales for the Group rose 3.9 percent.
In Region Europe & ROW, net sales totaled SEK 5,057m (4,632), up 9.2 percent, and 6.1 percent after currency adjustments. In Region Americas, net sales totaled SEK 1,980 (1,852), corresponding to an increase of 6.9 percent. After currency adjustment, sales decreased 1.2 percent year-on-year.
Gross income
Gross income amounted to SEK 2,829m (2,626) corresponding to a gross margin of 40.2 percent (40.5). After currency adjustment, the margin decrease totaled 0.6 percentage points. The somewhat lower margin is attributable to the effects of the tariffs introduced in the US on imports from China and under absorption at our own production facilities due to production volumes that were slightly lower than planned.
Operating income
Underlying EBIT amounted to SEK 1,245m (1,164), corresponding to an operating margin of 17.7 percent (18.0). After currency adjustment, the margin decrease was 0.7 percentage points year-on-year, mainly due to lower gross income and the continued substantial investments we are making in sales, marketing, and product development. Operating income amounted to SEK 1,195m (1,163), corresponding to an operating margin of 17.0 percent (17.9). Operating income in the fourth quarter was impacted by a cost for a reorganization, primarily in North America, amounting to SEK 24m and, in the third quarter, by an estimated cost of SEK 25m pertaining to a product recall. The recall is ongoing and the final cost has not yet been established.
Even if we at Thule Group are focused on quality and safety, and test our products extensively in accordance with strict requirements, both legal and internal, it can happen that we need to recall a product after it reaches the market. In the second half of the year, we initiated a recall within the RV products category of two models of motorized awnings. During the summer we received reports that the awnings, on a limited number of occasions, opened unexpectedly. No accidents have been reported, but since we always prioritize safety we decided to order a product recall in collaboration with our partners, RV manufacturers and retailers to ensure that customers can upgrade the product.
Net financial items
Net financial items for the full year amounted to an expense of SEK 49m (expense: 48). The interest expense for borrowings was SEK 45m (expense: 37). Exchange rate differences on loans and cash and cash equivalents amounted to SEK 0 (expense: 5).
Net income
Net income for the year was SEK 883m, corresponding to earnings per share of SEK 8.56 before dilution and SEK 8.55 per share after dilution. For the full-year 2018, net income was SEK 837m, corresponding to earnings per share of SEK 8.13 before dilution and SEK 8.12 after dilution.
Cash flow
Cash flow from operating activities during the fourth quarter was SEK 174m (16). The change compared with the yearearlier period was attributable to an improvement in working capital. During the quarter, the cash flow was impacted by a payment amounting to SEK 10m for the acquisition of the assets of Denver Outfitters.
Cash flow from operating activities was SEK 1,030m (606) for the full year. The increase was mainly attributable to the improvement in working capital, which was primarily driven by a lower build-up of inventory. Investments in tangible and intangible assets amounted to SEK 161m (178). During the year, a dividend of SEK 722m was distributed to the company's shareholders.
Financial position
At December 31, 2019, the Group's equity amounted to SEK 4,330m (4,012). The equity ratio amounted to 52.3 percent (52.1).
Net debt amounted to SEK 2,119m (1,974) at December 31, 2019. Total long-term borrowing amounted to SEK 2,348m (2,147), and comprised loans from credit institutions of SEK 2,178m (2,144) gross, long-term finance lease liabilities of SEK 164m (9), capitalized financing costs of SEK 10m (11) and the long-term portion of financial derivatives of SEK 15m (5). Total current financial liabilities amounted to SEK 65m (28) and comprised the short-term portion of financial derivatives and finance lease liabilities.
| SEKm | Dec 31 2019 | Dec 31 2018 |
|---|---|---|
| Long-term loans, gross | 2 342 | 2 153 |
| Financial derivative liability, long-term | 15 | 5 |
| Short-term loans, gross | 53 | 9 |
| Financial derivative liability, short-term | 12 | 19 |
| Overdraft facilities | 0 | 0 |
| Capitalized financing costs | -10 | -11 |
| Accrued interest | 0 | 0 |
| Gross debt | 2 413 | 2 175 |
| Finanial derivative asset | -26 | -16 |
| Cash and cash equivalents | -268 | -186 |
| Net debt | 2 119 | 1 974 |
Goodwill at December 31, 2019, amounted to SEK 4,620m (4,448). Of the increase, SEK 8m pertained to the acquisition of the assets of Denver Outfitters. At December 31, 2019, inventories amounted to SEK 1,092m (1,078). The entire increase was attributable to currency effects of SEK 30m.
Other information
Acquisitions
On 30 December, Thule Group acquired the assets of Denver Outfitters, North America's leading manufacturer of roof rack mounted fishing rod vaults. In 2019, Denver Outfitters had sales of around USD 1m and the purchase consideration amounted to USD 1m. The acquisition is not expected to have any material effect on Thule Group's financial performance or position.
Thule Group is the long-standing global market leader in enabling consumers to bring their outdoor gear to the trailhead, the mountain bike slope or the local lake. With the recent addition at the end of 2018 of North America's leading manufacturer of rooftop tents, Tepui, the portfolio of products that help consumers to live an active lifestyle outdoors has been broadened further. With this latest acquisition, roof rack mounted fly fishing rod vaults have been added to the product portfolio, and Thule can thus continue to grow the portfolio of solutions to help consumers bring the things they care for – easily, securely and in style.
Seasonal variations
Thule Group's sales and operating income are partially affected by seasonal variations. During the first quarter, sales in the Sport&Cargo Carriers category (roof boxes, ski-racks, etc.) are affected by winter conditions. The second and third quarters are impacted by how early the spring or summer arrives, while sales in individual quarters may be impacted by the quarter in which the spring or summer occurs. In the fourth quarter, seasonal variations are primarily attributable to sales of winter-related products (roof boxes, ski-racks, snow sport backpacks, etc.) and sales of products in the bag category prior to major holidays.
Employees
The average number of employees was 2,422 (2,356).
Thule Group's share
The shares of Thule Group AB are listed on the Nasdaq Stockholm Large Cap list. At December 31, 2019, the total number of shares in issue was 103,208,606.
Proposed dividend
The Board of Directors proposes a dividend of SEK 7.50 per share, corresponding to SEK 774m based on the number of shares outstanding at February 12, 2020. The proposed dividend amounts to 88 percent of earnings per share. It is also proposed that dividends 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 3.75 per share is April 30, 2020 and the proposed record date for the second payment of SEK 3.75 per share is October 5, 2020.
Annual General Meeting
The Annual General Meeting for Thule Group will be held on April 28, 2020, in Malmö, Sweden.
Shareholders
At December 31, 2019, Thule Group AB had 14,120 shareholders. At this date, the largest shareholders were AMF Försäkringar & Fonder (11.1 percent of the votes), Nordea Fonder (4.8 percent of the votes), Handelsbanken Fonder (3.9 percent of the votes) and Didner & Gerge Fonder (3.8 percent of the votes). See www.thulegroup.com for further information on Thule Group's shareholders.
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, 2019. The Parent Company invoices its costs to Group companies. The Parent Company reported net income of SEK 814m (697). Cash and cash equivalents and current investments amounted to SEK 0m (0). Long-term liabilities to credit institutions totaled SEK 2,168m (2,133).
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 Note 5, Risks and uncertainties.
Sales trend by region
| Oct-Dec | Change | Jan-Dec | Change | |||||
|---|---|---|---|---|---|---|---|---|
| SEKm | 2019 | 2018 | Rep. | Adjust.1 | 2019 | 2018 | Rep. | Adjust.1 |
| Net sales | 1 211 | 1 157 | 4.7% | 0.6% | 7 038 | 6 484 | 8.5% | 3.9% |
| - Region Europe & ROW | 797 | 741 | 7.4% | 4.2% | 5 057 | 4 632 | 9.2% | 6.1% |
| - Region Americas | 414 | 415 | -0.3% | -5.7% | 1 980 | 1 852 | 6.9% | -1.2% |
1Adjusted for changes in exchange rates
Region Europe & ROW
Net sales for the fourth quarter 2019 amounted to SEK 797m (741), corresponding to an increase of 7.4 percent (4.2 percent after currency adjustment). Growth for the full year was 9.2 percent (6.1 percent after currency adjustment).
The following positive trends were notable for the fourth quarter in terms of categories and markets:
- Roof box sales were very good, driven by the successful launch of the new premium roof box, Thule Vector.
- The European RV market continued to develop favorably and we continued to capture market shares. The general market trend differs greatly between countries, with the large German market continuing to post doubledigit growth while countries such as the UK and Sweden noted substantial declines and southern Europe was in line with the preceding year.
- The newer category, Luggage, performed very well, driven by the successful launch during the quarter of our second soft luggage collection, Thule Crossover 2, but also by the continued positive trend for the two other collections (Thule Subterra and Thule Revolve).
- The UK and all of the East European markets, with the exception of Russia, noted a healthy trend.
- Increasing sales of luggage and bags in Asia contributed to strong figures, primarily for South-East Asia.
After having been the largest growth driver in the region in the first six months of the year, sales of bike racks tracked the preceding year. This was expected, given that it was the low season for the bike category.
Region Americas
In Region Americas, sales decreased 0.3 percent (5.7 percent after currency adjustment) during the fourth quarter. The announced phase-out of less profitable products linked to certain OE contracts reduced sales by SEK 11m, which corresponded to around half of the decline. For the full year, sales grew 6.9 percent (down 1.2 percent after currency adjustment). The phased-out OE contracts reduced sales in the region by SEK 50m.
The US market continued to be the weakest market in the region in the fourth quarter, which was driven mainly by the previously announced phase-out of low-margin OE contracts and reduced sale of legacy products with simpler bags and cases in the Packs, Bags & Luggage category. Sales remained volatile in Latin America, in line with last year, though it was positive to note the strong sales in Canada across all product categories.
At the end of the quarter, we acquired the operations of the niche company Denver Outfitters, North America's leading manufacturer of roof rack mounted fishing rod vaults. The acquisition complements the entry into the rooftop tent category completed at the end of 2018 through the acquisition of Tepui. In combination with a broader offering of awnings for SUVs, this has created a growing product portfolio in adventure camping, primarily in the North American market. Both sub-categories will be sold under the Thule brand in 2020.
The reorganization of the North American organization announced in the third quarter was completed during the fourth quarter.
| Sport&Cargo Carriers | RV Products | Packs, Bags & Luggage | Active with Kids | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Share of Thule Group Sales 2019 (2018) |
63% 64%) |
15% (14%) |
12% (12%) |
10% (10%) |
|||||
| Share of | Eur&ROW | Americas | Eur&ROW | Americas | Eur&ROW | Americas | Eur&ROW | Americas | |
| Regional Sales 2019 |
59% | 71% | 21% | 1% | 8% | 21% | 12% | 7% | |
| (2018) | (62%) | (71%) | (19%) | (1%) | (8%) | (21%) | (11%) | (7%) | |
| Sales Growth 2019 vs 2018 |
+1.1% +13.2% |
+2.4% | +11.1% | ||||||
| (Constant Currency) | +2% | -1% | +13% | +9% | +7% | -2% | +15% | -3% |
Sales trend per product category for the full year
Sport&Cargo Carriers
Compared with the preceding year, growth in 2019 was impacted by four key factors:
- The phase-out of one low-margin OE contract in the US market for more basic pick-up truck accessories. The reduction in sales of SEK 44m had a negative impact of 1.1 percent on sales for the category.
- Lower sales of roof racks, mainly in the first half of the year, due to customers reducing inventories of the previous generation. Phase 2 of the new generation (of the three planned phases) is currently being launched in the market and we expect the phase-out of older products to be completed in 2020.
- The announced one-time contract in the Nordic market for roof boxes as part of a campaign for Volkswagen, which resulted in the comparative figures for the first half of 2018 being exceptionally high in that region.
- Extremely challenging conditions in the US market, primarily for the bike category, influenced consumers' cautious purchasing behavior in conjunction with the introduction of import tariffs.
Looking ahead, we are convinced that with fewer specific one-time factors and our market-leading product portfolio, we will return to normal growth in this category in 2020.
RV Products
Sales in this category are completely dominated by Region Europe & ROW and therefore heavily influenced by a European RV market that was unexpectedly strong throughout the year (the market is estimated to have grown 8 percent). We continued to capture market shares and grew 13 percent, driven mainly by accessories for smaller RVs where we have an very strong product offering.
For 2020, market expectations are that we will see somewhat lower market growth than we have over the past three to four years and where we as a company expect to continue to win market share.
Packs, Bags & Luggage
The general market decline in the previously large legacy categories (primarily camera bags and tablet cases), together with the phaseout of certain low-margin OE contracts for simpler cases, reduced sales by SEK 35m, mostly affecting sales in the US. In 2019, these shrinking sub-categories accounted for 29 percent (34) of the category.
Sales in the sub-categories where we are making strategic investments for the future – that is luggage, backpacks, bags for everyday use and sport-specific bags – grew SEK 54m (up 10 percent after currency adjustment).
Active with Kids
2019 was another successful year in the Region Europe & ROW in the category, where strollers and bicycle trailers posted rapid growth. Sales of child bike seats declined somewhat due to aggressive pricing by Central European competitors.
The performance in North America was a disappointment, partly due to that the largest competitor to our highly appreciated jogging stroller, Thule Urban Glide 2, decided to offer large discounts throughout the year – a pricing model we decided not to follow – as well as less success in breaking into juvenile store sector in the same way as in Europe with our new stroller, Thule Sleek. Over the year, we have bolstered the sales force with new personnel from the industry, and this together with the new Thule Spring stroller, which we are convinced better matches the way North American parents use strollers, means we look forward with high hopes for the performance in 2020.
The Board of Directors and the President provide their assurance that this interim 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, 2020
Board of Directors
Review report
This report has not been reviewed by the company's auditor.
Selected key events during the period
Acquisition of Denver Outfitters — In December, the operations of the niche company Denver Outfitters, North America's leading player in the roof rack mounted fishing rod vaults category, was completed. The company had sales of below USD 1m, but the products, in combination with the new rooftop tents (added through the acquisition of Tepui in December 2018) and our broader offering of awnings for SUVs, create an exciting expanding portfolio of adventure camping products suitable for the North American market.
Thule Crossover 2 collection of business and leisure luggage launched – Our second full collection of soft luggage was launched during the quarter. With backpacks for everyday use, carry-on luggage and checked luggage, we now have three complete luggage collections in the market.
Financial statements
(Unless otherwise stated, all amounts are in SEK m)
Consolidated Income Statement
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| Note | 2019 | 2018 | 2019 | 2018 | |
| Net sales | 2 | 1 211 | 1 157 | 7 038 | 6 484 |
| Cost of goods sold | -748 | -720 | -4 209 | -3 858 | |
| Gross income | 463 | 437 | 2 829 | 2 626 | |
| Selling expenses | -330 | -286 | -1 315 | -1 156 | |
| Administrative expenses | -86 | -87 | -319 | -307 | |
| Other operating expenses | 0 | 0 | 0 | 0 | |
| Operating income | 2 | 47 | 64 | 1 195 | 1 163 |
| Net interest expense/income | -14 | -8 | -49 | -48 | |
| Income before taxes | 33 | 56 | 1 146 | 1 114 | |
| Taxes | 4 | -3 | -13 | -263 | -277 |
| Net income | 30 | 44 | 883 | 837 | |
| Consolidated net income pertaining to: | |||||
| Shareholders of Parent Company | 30 | 44 | 883 | 837 | |
| Net income | 30 | 44 | 883 | 837 | |
| Earnings per share, SEK before dilution | 0.29 | 0.42 | 8.56 | 8.13 | |
| Earnings per share, SEK after dilution | 0.29 | 0.42 | 8.55 | 8.12 | |
| Average number of shares (millions) | 103.2 | 103.2 | 103.2 | 103.0 |
Consolidated Statement of Comprehensive Income
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | ||
| Net income | 30 | 44 | 883 | 837 | |
| Items that have been carried over or can be carried over to net income | |||||
| Foreign currency translation | -187 | -12 | 249 | 318 | |
| Cash flow hedges | 15 | 9 | 6 | 13 | |
| Net investment hedge | 44 | 7 | -34 | -118 | |
| Tax on components in other comprehensive income | -10 | -5 | -13 | -0 | |
| Items that cannot be carried over to net income | |||||
| Revaluation of defined-benefit pension plans | 14 | 3 | -28 | -13 | |
| Tax pertaining to items that cannot be carried over to net income | -3 | 0 | 6 | 4 | |
| Other comprehensive income | -127 | 2 | 185 | 203 | |
| Total comprehensive income | -98 | 46 | 1 069 | 1 040 | |
| Total comprehensive income pertaining to: | |||||
| Shareholders of Parent Company | -98 | 46 | 1 069 | 1 040 | |
| Total comprehensive income | -98 | 46 | 1 069 | 1 040 |
Consolidated Balance Sheet
| Dec 31 | Dec 31 | |
|---|---|---|
| 2019 | 2018 | |
| Assets | ||
| Intangible assets | 4 664 | 4 476 |
| Tangible assets | 1 023 | 778 |
| Long-term receivables | 5 | 13 |
| Deferred tax receivables | 376 | 341 |
| Total fixed assets | 6 067 | 5 609 |
| Inventories | 1 092 | 1 078 |
| Tax receivables | 1 | 16 |
| Accounts receivable | 704 | 655 |
| Prepaid expenses and accrued income | 62 | 69 |
| Other receivables | 91 | 85 |
| Cash and cash equivalents | 268 | 186 |
| Total current assets | 2 218 | 2 089 |
| Total assets | 8 285 | 7 697 |
| Equity and liabilities | ||
| Equity | 4 330 | 4 012 |
| Long-term interest-bearing liabilities | 2 348 | 2 147 |
| Provision for pensions | 205 | 169 |
| Deferred income tax liabilities | 259 | 221 |
| Total long-term liabilities | 2 812 | 2 537 |
| Short-term interest-bearing liabilities | 65 | 28 |
| Accounts payable | 529 | 564 |
| Tax liabilities | 14 | 78 |
| Other liabilities | 52 | 47 |
| Accrued expenses and deferred income | 430 | 406 |
| Provisions | 54 | 25 |
| Total short-term liabilities | 1 143 | 1 148 |
| Total liabilities | 3 955 | 3 685 |
| Total equity and liabilities | 8 285 | 7 697 |
Consolidated Statement of Changes in Equity
| Closing balance | 4 330 | 4 012 |
|---|---|---|
| Buy back of warrants | -3 | -12 |
| Dividend | -722 | -619 |
| New share issue | 0 | 138 |
| Transactions with the Group's owners: | ||
| Total comprehensive income | 1 069 | 1 040 |
| Other comprehensive income | 185 | 203 |
| Net income | 883 | 837 |
| Adjustment to Equity, January 1 | -26 | -2 |
| Opening balance, January 1 | 4 012 | 3 467 |
| 2019 | 2018 | |
| Dec 31 | Dec 31 |
Consolidated Statement of Cash Flow
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | ||
| Income before taxes | 33 | 56 | 1 146 | 1 114 | |
| Adjustments for items not included in cash flow | 1 | 2 | 160 | 118 | |
| Paid income taxes | -52 | -37 | -298 | -369 | |
| Cash flow from operating activities prior to changes in working capital | -18 | 21 | 1 008 | 863 | |
| Cash flow from changes in working capital | |||||
| Increase(-)/Decrease (+) in inventories | -138 | -207 | 19 | -222 | |
| Increase(-)/Decrease (+) in receivables | 186 | 134 | -31 | -79 | |
| Increase(+)/Decrease (-) in liabilities | 145 | 67 | 34 | 44 | |
| Cash flow from operating activities | 174 | 16 | 1 030 | 606 | |
| Investing activities | |||||
| Acquisition of subsidiaries | -10 | -75 | -10 | -75 | |
| Acquisition/divestment of tangible/intangible assets | -58 | -54 | -161 | -178 | |
| Cash flow from investing activities | -67 | -130 | -171 | -253 | |
| Financing activities | |||||
| New issue of shares | 0 | 0 | 0 | 138 | |
| Buy back of warrants | -2 | -4 | -3 | -12 | |
| Dividend | -361 | -310 | -722 | -619 | |
| Debt repaid/new loans | -14 | 100 | -53 | -256 | |
| Cash flow from financing activities | -378 | -213 | -779 | -749 | |
| Net cash flow | -271 | -327 | 81 | -396 | |
| Cash and cash equivalents at beginning of period | 540 | 512 | 186 | 581 | |
| Effect of exchange rates on cash and cash equivalents | -1 | 1 | 1 | 2 | |
| Cash and cash equivalents at end of period | 268 | 186 | 268 | 186 |
Condensed Parent Company Income Statement
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | ||
| Other operating revenue | 5 | 5 | 19 | 20 | |
| Administrative expenses | -9 | -6 | -34 | -32 | |
| Operating income | -4 | -1 | -15 | -12 | |
| Result from Shares in Subsidiaries | 800 | 700 | 800 | 700 | |
| Interest income- and expense | -3 | -1 | -12 | -3 | |
| Income after financial items | 793 | 698 | 773 | 685 | |
| Appropriations | 45 | 12 | 45 | 12 | |
| Net income before taxes | 838 | 710 | 818 | 697 | |
| Taxes | -8 | 0 | -4 | 1 | |
| Net income | 830 | 710 | 814 | 697 |
Condensed Parent Company Balance Sheet
| Dec 31 | Dec 31 | |
|---|---|---|
| 2019 | 2018 | |
| Assets | ||
| Financial fixed assets | 5 586 | 5 449 |
| Total fixed assets | 5 586 | 5 449 |
| Other current receivables | 47 | 15 |
| Cash and cash equivalents | 0 | 0 |
| Total current assets | 47 | 15 |
| Total assets | 5 633 | 5 464 |
| Equity and liabilities | ||
| Equity | 2 195 | 2 106 |
| Other provisions | 14 | 11 |
| Liabilities to credit institutions | 2 168 | 2 133 |
| Liabilities to Group companies | 368 | 368 |
| Total long-term liabilities | 2 551 | 2 512 |
| Liabilities to credit institutions | 0 | 0 |
| Liabilities to Group companies | 871 | 834 |
| Other current liabilities | 16 | 11 |
| Total short-term liabilities | 887 | 846 |
| Total equity and liabilities | 5 633 | 5 464 |
Disclosures, accounting policies and risk factors
Disclosures in accordance with Paragraph 16A of IAS 34 Interim Financial Reporting can be found in the financial statements and the associated notes as well as in other sections of the interim report.
Note 1 Accounting policies
This condensed consolidated interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, and the applicable provisions of the Swedish Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with Chapter 9 of the Swedish Annual Accounts Act on interim financial reporting. With the following exceptions, the same accounting policies and calculation methods have been applied for the Group and Parent Company as in the most recent Annual Report. The Group has applied IFRS 16 Leases from January 1, 2019. A description of IFRS 16 and the effects of the transition were described in Note 1 of the latest annual report. As the Group has applied the modified retrospective approach, the comparative figures have not been restated. The following extracts from the financial statements have been recalculated as if IAS 17 had been applied in 2019. Operating income, shown in the table below, the net impact of reversed operating leasing fees and depreciation for right-of-use assets is shown.
Comparative figures as if IAS 17 had been applied in 2019.
| Extract from income statement | IFRS 16 | IAS 17 | IFRS 16 | IAS 17 | ||
|---|---|---|---|---|---|---|
| Oct - Dec | Jan - Dec | |||||
| 2019 | 2019 | 2018 | 2019 | 2019 | 2018 | |
| Underlying EBITDA | 113 | 97 | 84 | 1 383 | 1 322 | 1 238 |
| Underlying EBIT | 71 | 70 | 64 | 1 245 | 1 236 | 1 164 |
| Operating income | 47 | 46 | 64 | 1 195 | 1 186 | 1 163 |
| Net interest expense/income | -14 | -11 | -8 | -49 | -40 | |
| Income before taxes | 33 | 35 | 56 | 1 146 | 1 146 | 1 114 |
| Net income | 30 | 31 | 44 | 883 | 883 | |
| Extract from balance sheet | IFRS 16 | IAS 17 | ||||
| Dec 31 | Dec 31 | Dec 31 | ||||
| 2019 | 2019 | 2018 | ||||
| Assets | ||||||
| Tangible assets | 1 023 | 858 | 778 | |||
| Deferred tax receivables | 376 | 368 | 341 | |||
| Equity | 4 330 | 4 356 | 4 012 | |||
| Liabilities | ||||||
| Long-term interest-bearing liabilities | 2 348 | 2 199 | 2 147 | |||
| Short-term interest-bearing liabilities | 65 | 14 | 28 |
Note 2 Operating segments and allocation of revenue
Thule Group comprises one segment. Though the Group has shared global processes for product development, purchasing, manufacture, logistics and marketing, its sales are managed in two regions, Region Europe & ROW and Region Americas. Internal monthly follow-up focuses on the Group as a whole, in addition to the geographic sales data, which is presented at other levels than Group level.
| Oct - Dec | Jan - Dec | ||||
|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | ||
| Sales to customers | 1 211 | 1 157 | 7 038 | 6 484 | |
| - Region Europe & ROW | 797 | 741 | 5 057 | 4 632 | |
| - Region Americas | 414 | 415 | 1 980 | 1 852 | |
| Underlying EBITDA | 113 | 84 | 1 383 | 1 238 | |
| Operating depreciation/amortization | -42 | -20 | -138 | -74 | |
| Underlying EBIT | 71 | 64 | 1 245 | 1 164 | |
| Other depreciation/amortization | 0 | 0 | -1 | -1 | |
| Items affecting comparability | -24 | 0 | -49 | 0 | |
| Operating income | 47 | 64 | 1 195 | 1 163 | |
| Net interest expense/income | -14 | -8 | -49 | -48 | |
| Taxes | -3 | -13 | -263 | -277 | |
| Consolidated net income | 30 | 44 | 883 | 837 |
All revenue is recognized at one point in time.
Note 3 Fair value of financial instruments
| Fair value | |||
|---|---|---|---|
| Dec 31 | Dec 31 | ||
| 2019 | 2018 | ||
| Assets - Financial derivatives | |||
| Currency forward contracts | 13 | 8 | |
| Currency swaps | 3 | 2 | |
| Currency options | 0 | 0 | |
| Interest rate swaps | 9 | 6 | |
| Total derivative assets | 26 | 16 | |
| Liabilities - Financial derivatives | |||
| Currency forward contracts | -5 | -6 | |
| Currency swaps | -7 | -6 | |
| Currency options | 0 | 0 | |
| Interest rate swaps | -15 | -12 | |
| Total derivative liabilities |
The carrying amount is an approximation of the fair value for all financial assets and liabilities. The Group's long-term liabilities are subject to variable interest rates, which means that changes in the basic interest rate will not have a 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 measured at fair value in the balance sheet consist of derivatives held to hedge the Group's exposure to interest rates, currency rates and raw material prices. All derivatives belong to Level 2.
Note 4 Taxes
The effective tax rate for January–December 2019 amounted to 22.9 percent. The effective tax rate for the corresponding period in 2018 amounted to 24.9 percent. During the quarter we benefited from a tax reduction attributable to our operations in Poland of SEK 11m. Otherwise, no significant events affecting the Group's effective tax rate occurred during the year.
Note 5 Risks and uncertainties
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.
Thule Group's operations are also exposed to seasonal variations. Demand for consumer products for an active outdoor lifestyle (such as bike racks or water sport-related products) is greatest during the warmer months of the year, while demand for smaller bags is greatest when schools start and at the end of the year. Thule Group has adapted its production processes and supply chain in response to these variations.
Other relevant risk factors are described in Thule Group's Annual Report and pertain to industry and market-related risks, operating, legal and fiscal risks as well as financial risks.
Key figures
| Oct - Dec | Jan - Dec | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Net sales, SEKm | 1 211 | 1 157 | 7 038 | 6 484 |
| Net sales growth, % | 4.7% | 15.0% | 8.5% | 10.4% |
| Net sales growth, adjusted %1 | 0.6% | 8.0% | 3.9% | 6.0% |
| Gross margin, % | 38.2% | 37.8% | 40.2% | 40.5% |
| Underlying EBIT, SEKm | 71 | 64 | 1 245 | 1 164 |
| Underlying EBIT-margin, % | 5.9% | 5.5% | 17.7% | 18.0% |
| Operating income (EBIT), SEKm | 47 | 64 | 1 195 | 1 163 |
| Operating margin, % | 3.9% | 5.5% | 17.0% | 17.9% |
| Earnings per share, SEK | 0.29 | 0.42 | 8.56 | 8.13 |
| Equity ratio, % | 52.3% | 52.1% | 52.3% | 52.1% |
| Working capital, SEKm | 1 140 | 969 | 1 140 | 969 |
| Leverage ratio | 1.5 | 1.6 | 1.5 | 1.6 |
1Adjusted for changes in exchange rates
Alternative performance measures
Alternative performance measures are used to describe the underlying development of operations and to enhance comparability between periods. These are not defined under IFRS but correspond to the methods applied by Group management to measure the company's financial performance. The alternative performance measures used are net debt (see table on page 5), underlying EBIT and underlying EBITDA. Underlying denotes that we have made adjustments for specific items, see Note 2 Operating segments and allocation of revenue. For further information, please refer to the Definitions section. These performance measures should not be viewed as a substitute for financial information presented in accordance with IFRS but rather as a complement.
Definitions
Gross margin Gross income as a percentage of net sales.
Gross income Net sales less cost of goods sold.
Gross debt Total long and short-term borrowing including overdraft facilities, financial derivatives, capitalized transaction costs and accrued interest.
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.
EBIT (Earnings before interest and taxes) Income before net financial items and taxes.
EBIT margin EBIT as a percentage of net sales.
Equity per share Equity divided by the number of shares at the end of the period.
Items affecting comparability Profit/loss items that are by their very nature unusual and significantly impact profit or loss. These play an important part in understanding the underlying business performance.
Net investments Investments in tangible and intangible assets adjusted for disposals.
Net debt Gross debt less cash and cash equivalents.
Operational depreciation/amortization The Group's total depreciation/amortization excluding depreciation/amortization of consolidated excess values. Other depreciation/amortization comprises depreciation/amortization of consolidated excess values.
Operating cash flow Cash flow based on underlying EBITDA and operating working capital including investments in tangible and intangible assets but excluding interest and tax payments.
LTM Rolling 12-month.
Earnings per share Net income for the period divided by the average number of shares during the period.
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. Working capital in the cash flow excludes cash and cash equivalents.
Leverage ratio Net debt divided by the underlying LTM EBITDA.
Equity ratio Equity as a percentage of total assets.
Underlying EBITDA EBITDA excluding items affecting comparability.
Underlying EBIT EBIT excluding items affecting comparability and depreciation/amortization of consolidated excess values.
Financial calendar
| Interim report January–March 2020 | April 28, 2020 |
|---|---|
| Thule Group AGM (Malmö) | April 28, 2020 |
| Interim report April–June 2020 | July 21, 2020 |
| Interim report July–September 2020 | October 23, 2020 |
Thule Group's Annual Report will be available at www.thulegroup.com from the week commencing April 6, 2020.
Contacts
Fredrik Erlandsson, Senior Vice President Communications and IR 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 Thule Group
Thule Group is a world leader in products that make it easy to bring the things you care for — easily, securely and in style — when living an active life. Under the motto Active Life, Simplified — we offer products within Sport&Cargo Carriers (roof racks, roof boxes and carriers for transporting cycling, water and winter sports equipment, and rooftop tents mounted on a car), Active with Kids (bicycle trailers, buggies and child bike seats), RV Products (awnings, bike racks and tents for motorhomes and caravans) and Packs, Bags & Luggage (e.g. hiking backpacks, luggage and camera bags).
Thule Group has about 2,300 employees at nine production facilities and 35 sales offices worldwide. The Group's products are sold in 140 markets and in 2019, sales amounted to SEK 7 billion. www.thulegroup.com
Thule Group AB (publ) Fosievägen 13 SE-214 31 Malmö, Sweden Corp. Reg. No: 556770-6311 www.thulegroup.com