Thule Group has published its interim report for the second quarter of the year, revealing net sales declined 12.3% to SEK 2,043 million.
Attributing this dip to the ‘significant negative impact’ of the Covid-19 pandemic on sales in the quarter, Thule also saw its operating income down 23% to SEK 430 million for the quarter.
Despite this, the group was able to manage major production fluctuations resulting from factory shutdowns to maintain high margins, delivering an EBIT margin of 21%. Thule also generated improved cash flow in comparison to the prior year of SEK 523 million.
In April, sales nearly halved year-on-year due to lockdowns around the globe, while in May a number of countries began to permit active leisure activities. This meant the Group was able to regain some of the lost sales from the Spring period in June, where sales started to grow strongly.
The differences between countries and categories remained extreme, however, giving rise to major operational challenges, according to CEO and President Magnus Welander.
“We have focused on the health and safety of our employees since the outbreak of corona,” he said. “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.”
In Europe, performance was weak in countries with extreme pandemic measures, such as France, Italy, Spain and the UK, where sales declined significantly. However, the group noted that countries where social restrictions were successively eased immediately displayed a high level of growth, with some of the sales normally made during the Spring shifting to the early summer period.
Thule stated its growing portfolio of products in the bike category such as bike racks, trailers and child bike seats, performed particularly strongly at the end of the quarter.
The situation in the Americas somewhat mirrored that of Europe, with sales strong at the end of the quarter driven by a healthy demand for bicycle-related products as a result of large increases in bike sales in the US and Canada. Sales in Latin American remained weak for the entire quarter, however, due to the escalating pandemic situation in the market.
Welander continued: “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.”
Thule is looking to continue its ‘aggressive’ product development agenda in order to drive the group’s future growth, and will present a number of new products in a virtual format to retailers in the autumn, using new digital tools. These products will be launched to consumers in stores during Spring 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,” Welander added.