E-bike sales now 43% of Accell Group turnover, reveals six month financial statement

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Electric bike sales have once again been largely singled out for helping the Accell Group deliver double digit growth in the first six months of 2016.

Recording a 10% increase in turnover to € 629.7 million in the six months to 30 June 2016 (2015: € 573.8 million), the firm says the additional business was entirely organic. Net profit in the same period rose by 7% to € 34.0 million (2015: € 31.9 million).

René Takens, Chairman of the Board of Directors of Accell Group commented: “The market conditions for the specialist retail sector were not particularly easy in the first six months of this year, as weather conditions in particular had a negative impact on bicycle sales in many countries. Despite these unfavourable conditions, we have recorded strong organic growth in the first half of 2016, largely driven by higher sales of electric bikes. We are benefiting specifically from our leading position in the field of electric bikes, which currently account for some 43% of our total turnover. Turnover from E-performance bikes has doubled in the last six months.

“Turnover from bicycle parts and accessories was also higher in Europe, but we did see a slight drop in total turnover in this segment due to the sale of our North American operations. Profit growth came under a certain amount of pressure in the past half year, due to lower margins on the sales of older bike ranges and extra costs incurred in connection with two major bankruptcies of multi-sports chains in North America. These bankruptcies are a clear sign of the far reaching changes in consumer purchasing behaviour, changes that we are seeing to a lesser or greater degree in many countries. We therefore devoted a great deal of attention in the first half of the year to tightening our strategy and we will be giving consumers in many of the countries in which we are active a much more prominent role in this strategy.

“In the first half of the year, we managed to sharply reduce working capital compared with year-end 2015. This was reflected in the considerable increase in free cash flow, which came in about €40 million higher than in the same period of last year. For the second half of 2016, we expect to record higher turnover and profit, barring unforeseen circumstances”.

Describing the strong electric bike performance as enough to “offset the impact bad weather”, turnover in the segment continued to rise, up 39%. The group notes that consumers are, in many cases, “replacing” pedal powered builds with the latest pedal assist tech.

Another perk of the marked increase in e-bikes is the average sales price coming in some 23% higher at € 541 (first half of 2015: € 439) per bike.

Traditional bike sales fell by 15%, while ‘sport’ bike turnover remained stable. All things considered, the bicycle segment did still grow by 13% at € 490.3 million in the first half of 2016 (first half of 2015: € 432.7 million).

Accell Group sold a total of 908,000 bikes in the first half of 2016 (first half of 2015: 985,000 bikes). The operating result from the bicycle segment rose by 7% to € 49.6 million (first half of 2015: € 46.3 million).

By territory, the Netherlands remained fairly flat, with Germany delivering the greatest surge in turnover, up 26% compared with the year prior. Both Haibike and Ghost sales contributed heavily to the increase in trade, again largely electric builds driving fresh interest.

Elsewhere in Europe, Accell said turnover in France, the United Kingdom, Belgium, Spain, Austria and Switzerland contributed to a Rest of Europe rise of 24%.

Meanwhile, North America dipped 3%, largely as a result of the bankruptcies of two major sporting goods chains who were big Diamondback stockists. This led to $2 million in direct costs, said the report.

On top of this, the company also faced indirect costs as a result of the loss of sales to those two chains and the price pressure in the market resulting from the liquidation sales of the inventories. The Ghost brand, which was launched in North America last year, recorded an increase in bike sales. Turnover from Raleigh bikes sold to the specialist retail trade was down, due in part to competitive pressures and difficult conditions in the North American specialist retail sector. Accell Group has taken the first steps towards omni-channel sales at the Raleigh brand, which has traditionally only delivered to bike dealers.

To read the full statement, see here.