High profitability in extreme quarter

The second quarter was exceptional in many respects for Thule Group, primarily due to the massive lockdowns in our core markets in Europe and North America due to the corona pandemic.

I am therefore very satisfied that, despite a decline of 11.6 percent in sales, we were again able to demonstrate our ability to manage major production fluctuations while maintaining high margins. In Q2 we delivered an EBIT margin of 21.0 percent (24.1).

In April sales nearly halved year-on-year due to lock-downs, while in May a number of countries began to permit active leisure activities. This meant that we in June regained some of the lost sales from the spring period and sales in June therefore grew strongly. The differences between countries and categories remained extreme, ranging from highly favorable growth to sales that were more than halved.

The large fluctuations between categories, countries and months naturally gave rise to major operational challenges. Nonetheless, we achieved operating income of SEK 430m (558) for the quarter. In addition, we generated an improved cash flow compared with prior year of SEK 523m (431).

Region Europe & ROW – positive end to the quarter with major differences between countries and categories
During the quarter, sales in the region declined by 12 percent after currency adjustment. Similar to the situation at the end of the first quarter, performance was weak in countries with extreme pandemic measures, such as France, Italy, Spain and the UK, where sales declined significantly.

During the quarter, it was positive to note that the countries where the social restrictions were successively eased, immediately displayed a high level of growth and that some of the sales normally made during the spring were instead realized during the early summer period. This confirms that consumers want to continue living active lives and appreciate our products.

Our large and growing portfolio of products in the bike category (bike racks, bicycle trailers and child bike seats) stood out and performed strongly in the end of the quarter.

Region Americas – very strong end to the quarter, driven by the bike category
In Region Americas, sales declined by 12 percent in the quarter after currency adjustment. As in Europe, sales at the end of the quarter were strong, mainly driven by a very healthy level of demand for bicycle related products. The growth in these categories was partly fuelled by the large increase in bicycle sales in the US and Canada.

Sales in Latin America, however, were weak for the entire quarter due to the escalating pandemic situation in these markets.

Focus on rapid adjustments and a long-term approach in a continued uncertain market
We have focused on the health and safety of our employees since the outbreak of corona. At the same time, during the extreme fluctuations of the recent period, we were able to benefit from our production set-up, with flexible assembly plants and logistics flows. However, we were unable to fully meet the significant rise in demand for certain products at the end of June and beginning of July.

We foresee good opportunities to offset some of the lost sales from the spring season during the third quarter and to also continue to ride the wave of a generally strong bike sector in the countries that have opened up for travel and leisure activities.

However, we expect to see continued low demand in other categories, such as bags. We will also be challenged by the fact that some major markets still have extensive restrictions in stores and on the possibilities to carry out group activities. The consequences of the covid-pandemic creates much uncertainty, but we believe in our long-term approach with great products for active people.

We continue to push an agressive product development agenda to drive future growth. During the atumn, we are going to present many new products to our retailers and we will do so virtually, using new digital tools. The products will be launched to consumers in stores during the spring of 2021.

I want to finish by thanking all my colleagues at Thule Group who have demonstrated fantastic flexibility during a difficult period, with efforts ranging from how to resolve delivery challenges to ramp up rapidly at the end of the quarter as demands increased to developing new and inspiring digital sales tools featuring fantastic material in a short space of time.

Magnus Welander
CEO and President

Contacts

Fredrik Erlandsson SVP Communications and Investor Relations
Tel: +46 70 309 00 21
E-mail: fredrik.erlandsson@thule.com

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 (e.g. roof racks, roof boxes and carriers for transporting cycling, water and winter sports equipment, and rooftop tents mounted on a car), Active with Kids (e.g. bicycle trailers, buggies and child bike seats), RV Products (e.g. 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 2,400 employees at 9 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

Attachments

Thule Groups' (publ) CEO and President, Magnus Welander, comments on the company's Interim Q2 Report, 2020

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