Interim report 3Q 2006

Thule improves net sales by 25.7% and operating profit (EBITA) by 33%.

Nine Months Financial and Operational Highlights:

• Sales up 25.7% to SEK2,998 million (2005: SEK 2,384 million), an increase of 9.5% once adjusted for currency and acquisition effects 
• Operating profit (EBITA) before one-off items up 33% to SEK 415 million (2005: SEK 313 million), adjusted for currency and acquisition effects an increase of 10.5%
• Approval from EU anti trust authorities for the acquisition of Brink International, SportRack Accessories and Valley Industries. The companies were consolidated into the Thule Group from September 6th 2006 
• Acquisition of Austrian Pewag Schneeketten still pending EU approval. A decision is expected during the fourth quarter. 
• Move initiated of OES production flow groups from Sweden to Poland, European warehouse established in Germany
• New important product launches at trade shows in Europe and North America

Anders Pettersson, Chief Executive of Thule AB, commented:
“The very strong sales development during the fisrt half year slowed down during August mainly as result of bad weather conditions in European core markets. Thule’s organic sales growth after the main season amounts to close to ten percent, proving the sustainability of the Thule business model despite tough market conditions.”

“During September we established two new business divisions for the acquired Towing Systems operations in Europe and North America. SportRack Accessories, the Canadian car rack systems supplier, has been integrated into our North American car rack systems operations. We installed new division management for Towing Systems North American with the objective to improve earnings into double digit figures going forward”. 

Divisional Highlights during the first nine months 2006

Division Europe/Asia reported sales of SEK1,089 million (2005:SEK831 million) during the first nine months of 2006. As previously announced, Magnus Welander started in August as new Division President, while Peter Kral took over the new position as Executive Vice President Business Development for the Thule Group.

During the third quarter the Division started to move a number of production flow groups for OES projects from Hillerstorp in Sweden, to Huta in Poland, to further optimize the manufacturing facilities. Additionally, the division took the lead in a Group initiative to establish a new central warehouse and distribution point in Germany. This transfer will be finalized early 2007. As the customer base has moved further into Central Europe, the new outsourced set up will enable improved customer service in our major markets and shortened lead times for finished goods deliveries.

The sales development for rear mounted bike carrier products continued to be strong, while sales in the lower range of rooftop box category were weaker. Upcoming product launches like the new premium bike carrier EuroClassic G5 were very well received at the Automechanika trade show in Germany during September. At the same occasion Thule launched a new assortment of car rack and accessory solutions for professional users. The combination of user friendly products with features that will save time and ensure safe handling of equipment got high marks from the potential customers and sales will start at the end of the first quarter 2007.
After weaker August trading, sales have improved in September, especially in core Central European markets, Eastern Europe and the Nordic Region. The development in UK, South America and South East Asia is still weaker than expected.

The business unit RV Accessories (former Omnistor) with products and accessories for recreational vehicles and campers developed in line with plan. In August, Thule launched a new awning product line under the Omnistor brand at the annual Caravan Salon in Germany, which was very well received.

The North American division reported sales of USD60.9 million (2005:USD56.1 million) during the first nine months, including SportRack sales of USD0.8 million. After very strong sales development during the first six months, sales slowed in July and August,  with close to double digit sales growth number for the Thule core product portfolio. The sports distribution channel is performing well, while the automotive channel continues to be affected by higher gas prices. Thule continues to drive market growth and introduced 20 new products at the important late summer shows in Salt Lake City and Las Vegas, mainly within bike carriers, cargo management and the water sport assortment. New car rack system solution for professional users will be presented at the upcoming SEMA show in November.

Newer product categories such as the Load & Go cargo management assortment are developing well. The introduction of Thule branded accessories for recreational vehicles has entered its final planning phase and the launch is planned for an important trade show for the RV industry in December.

Since September, the SportRack Accessories operations, with annual pro forma sales of $ 18 million are part of the division’s sales and product portfolio. SportRack is based in Granby, Canada and offers as Thule in North America roof racks, bike carriers and rooftop boxes mainly for the Canadian market. The brand SportRack will be used in addition to the Thule premium brand on the North American market. The integration work has started at pace  in both assortment rationalization and sales synergies. The integration process is expected to be finalized by year end.

Sales in the Automotive Accessories division amounted to SEK368 million (2005: SEK371 million). The division strived to get further compensation for the rapidly increasing raw material prices while experiencing a healthy growth with car rail products that were introduced to the market over the past two years. On the OES side a newly developed rooftop box for a premium German car manufacturer sold better than planned.

During the reporting period, the division had to fight a large order back log in the Swedish rack facility and established an activity plan during the third quarter to move the majority of all production flow groups during the final quarter of 2006 to the facility in Huta, Poland. The project and sales management as well as customer service functions for the OES business unit will remain in Hillerstorp. The focus in the OEM business unit continues to be on taking out costs in the supply chain. The introduction of the single piece flow assembly process at the UK site in Rotherham contributes to reducing waste in material handling and of work in progress.

Division Trailers reported sales of SEK796 million (2005: SEK643 million) and continues to show an organic growth stronger than 20% compared to last year. Based on the cost advantage through component manufacturing in low cost countries, the division has been able to capture sales opportunities in the home market Scandinavia as well in other geographies such as Poland, France, Germany and North America.

Thule’s horse trailer product range made its foray into the Scandinavian market and the category is now bound for new market entries in other European markets. The sales of European style galvanized trailers in North America, that are final assembled at the Chicago facilities, went better than planned and new products such as smaller trailers to be used behind All Terrain Vehicles (ATV) are next in line for a launch in several countries. The dramatic increase of aluminum prices have triggered a restructuring of the North American aluminum trailer production in Maine with an increased focus on component production from low cost countries.

The Italian trailer operations with the brand Ellebi, which were previously part of Division Towing Systems Europe/Asia, have been part of the division since September. The integration work has started to analyze the operational profitability and to initiate synergies with other European trailer entities.

Division Snow Chains reported sales of €20.1 million (2005:€17.4 million). The division continues to show higher sales than previous year as stock has to be replenished earlier than normal due to the past two consecutive strong winters. The improved production capacity at the Italian site as well as increased assembly capabilities in Poland will support the division to capture all sales for the upcoming season. The EU approval of the acquisition of Austrian Pewag Schneeketten was delayed because of a prolonged investigation. A decision is expected during the final quarter of the year and all planned integration projects are on hold as result . The division continues to expand into new territories and introduces high end passenger car snow chains on the North American market under the Thule brand in connection with the SEMA automotive show in early November.

Brink International produces towing systems and wiring kits since September has been consolidated into Division Towing Systems Europe/Asia reporting annual pro forma sales of € 105 million. The division is based in Staphorst, Netherlands, and has manufacturing and sales units in Netherlands, France, UK, Denmark, Germany, Italy, Poland and Sweden. The sales for September are €8.3million and are in line with the general sales trend throughout the year. After a slow start into the year the division gained momentum and especially the third quarter showed a healthy sales development both in the aftermarket and with deliveries directly to European car manufacturers (OEM). The introduction of the first retractable towing system for the European aftermarket under the Brink brand underpins the innovation capacity of the division. The positive response from the customer side indicates that the shift to higher end towing systems will continue. The integration with Thule has started and first projects are launched to drive cross divisional product innovations and sales prospects.

The North American arm of Thule’s towing operations is Division Towing Systems North America which shows annual pro forma sales of $98 million and is based out of Lodi, California. The majority of sales are generated from the North American aftermarket and steered out of Lodi. The former Valley Industries has another site in Madison Heights, Michigan, focusing on direct deliveries to North American car manufacturers. Sales for September amounted to $7million and are slightly better than forecasted. The divisional management under the leadership of new recruited Division President George Caplea focuses on improving profitability of the division through a combination of strengthening operational and sales efficiency. At the upcoming SEMA show in Las Vegas in November the division will reveal the revamped Valley product brand and innovations for fifth wheel hitches and brake control systems.

Outlook

The acquisitions of Brink, SportRack and Valley are a major step in transforming the Thule Group into a 6 billion SEK business. The company will focus in the remaining months of 2006 on integrating the operations into the Thule Group without losing focus on the core business. The final decision on the prolonged investigation of the Pewag Schneeketten acquisition is due in December. 

MSEK	Jan-Sept		Sept 05 -Sept 06	Jan-Dec
	2006	2005	Rolling-12	2005
Sales	2 998	2 384	3 773	3 160
Year-on-year growth	25,70%	9,90%		13,50%
Year-on-year growth, currency adjusted	24,20%	10,00%		12,00%
Operating before Goodwill amortizations (EBITA) before one-off items	415	313	494	391
% of Sales	13,90%	13,10%	13,10%	12,40%
One-off items	-5	-7	-11	-13
Operating before Goodwill amortizations (EBITA)	410	305	483	378
% of Sales	13,70%	12,80%	12,80%	12,00%
Investments	72	59	105	92
Average number of employees	2 706	2 204	2 645	2 332

Malmö, October 25th, 2006
Thule AB

This report has not been subject to examination by the auditors. The accounting principles used are equal to those applied in the Annual Report, which is available for downloading at www.thule.com.

For further information please contact:
Anders Pettersson, CEO, phone: +46 (0)703 414150
Daniel Oelker, SVP Corporate Communication, phone: +46 (0)730 799004

About Thule

The Thule Group is the world leader within Sports Utility Transportation delivering transportation solutions for active families and outdoor enthusiasts wanting to transport their equipment by vehicles safely, easily and in style. The product portfolio comprises load carriers for cars such as rooftop boxes, roof rails and bike carriers. Additionally, the company offers snow chains, trailers, towing systems as well as accessories for motor homes and caravans. Thule has approx 3,700 employees at over 30 production and sales locations in all major car markets in North America, Europe, Africa and Asia. Pro forma sales (including Brink, Valley and SportRack) amount to SEK 5.2 billion (approx € 560 M). Thule AB is based in Malmö, Sweden, and majority owned by UK-based private equity firm Candover (www.candover.com).