Accell Group set for slight growth on 2020’s spike, dividend resumes

The Accell Group’s share price is sharply up (12.5%) this morning on news that the cycling and mobility group has maintained growth over last year’s surge in sales.

The year-to-date trading update leads into November and revealed that, even taking into account a strong H2 2020 to compare against, as well as global supply headaches, the business is still 4.4% ahead in net sales terms.

This has resulted in Accell reporting a strong 2021 profit accretion with EBIT YTD November reaching €107 million (8.3% of net sales), up 32.1% versus 2020.

As a result Accell has opted to repay in full its remaining €69 million GO-C facility this December and rearranged its existing Revolving Credit Facility (RCF) from seasonal to full year availability to better reflect the change in seasonal patterns.

With these facilities repaid, a Dividend resumes for the business’s shareholders, though “Accell will continue to take a cautious stance with regard to cash distributions.”

Ton Anbeek, CEO Accell Group: “Considering the limited component availability circumstances we saw good sales levels and continued strong profit accretion in H2 2021 through November. We benefitted from our various initiatives aimed at mitigating the ongoing effects of the global component shortages and recovering added value. In parallel, we continued to execute on our strategy with good progress on our digital roadmap across brands and regions and market introductions of multiple innovations across our bicycle brand portfolios. Over the past months we also launched several new e-cargo concepts across our Raleigh, Lapierre, Batavus and Winora brands to further strengthen our leading position in this fast-growing bicycle segment. Overall, we are well on track to meet our 2022 targets.”

In welcome news for the industry and Accell, numerous Asian component suppliers that had shut or limited production are now running again, easing the shortages. As for the group’s own production, lines are pen, but trail market demand in their output.

In order to remain ahead of the curve on further outages, Accell has been investing heavily in inventory levels and ongoing availability downstream. this is in part on the assumption that demand will remain strong through 2022.

Demand across Europe for both bicycles and parts accessories remained strong in H2 2021 to date, according to the group.

Net sales for the year to date hit €1,287 million. The performance improvement was mainly driven by a continued recovery of added value (+269 bps) which was partly used to increase marketing and R&D efforts.

Outlook

Low inventory in the marketplace at the present time will continue to help drive sell through, alongside positive sentiment for the electric bike market among the consumer discovering pedal assistance, says Accell.

“Order books are strong and well-filled, but global component shortages will continue and sales levels of both bicycle as well as parts & accessories will be impacted by fluctuations in arrival times of certain components. Against this backdrop, it is expected that FY 2021 EBIT will substantially exceed FY 2020,” concluded the update.