Year End Report 2006
Thule delivers improvement in net sales of 33% and operating profit of 25%
Twelve Months Financial and Operational Highlights:
- Sales up 33% to SEK4,217 million (2005: SEK 3,160 million), an organic growth of 10.6%
- EBIT operational before depreciation of excess value and one-off items up 25% to SEK 493 million (2005: SEK 395 million), an organic growth of 11%.
- Strong organic growth in the trailer and snow chains operations
- Approval from EU anti trust authorities for the acquisition of Brink International, SportRack Accessories and Valley Industries. The companies are consolidated in the Thule Group since September
- Acquisition of Austrian Pewag Schneeketten withdrawn from filing at the EU commission and purchasing contract revoked
- New organization based on customer and channel needs launched early 2007
Anders Pettersson, Chief Executive of Thule AB, commented:
“2006 has been another successful year for the Thule Group. We have managed to maintain an organic growth rate of approx 10 percent despite tough market conditions. Additionally we have acquired four new companies and started the integration work.”
“During December we revoked the purchasing contract with Pewag Schneeketten GmbH and withdrew the filing at the European Commission. We were not successful in convincing the EU commission about our position. However we intend to proceed in expanding our snow chains operations by other means.”
“We will continue 2007 in pursuing our objective of becoming a one Billion Euro turnover company by 2009 through a combination of organic and acquired growth. The underlying market trends are favourable and we have fine-tuned our organizational set-up to capture inherent synergies. Finally, we aim to improve our cash-flow situation after a weak performance in the supply chain division during 2006.”
Operational Highlights during 2006
The Europe/Asian Division reported sales of SEK1,313 million (2005:SEK1,054 million) during 2006. The division has successfully launched new bike carrier solutions in 2006; however further improved organic growth has been hampered by delivery problems mainly at the Swedish rack production facility in Hillerstorp. Actions have been taken including changes in local management, reorganization of the production and clarifying roles and responsibilities to improve the situation ahead of the upcoming summer season 2007. In line with the improvement programs a number of production flow groups for OES customer projects were moved from Hillerstorp to Huta in Poland.
Additionally, leading a Group initiative, the division has established a new central warehouse and distribution point in Germany. As the customer base becomes more concentrated in Central Europe, this new outsourced set-up enables improved customer service in our major markets and shortened lead times for finished goods deliveries.
After very strong trading during the first six months, overall sales were weaker during the second half of the year. Core Central European and Asian markets were especially affected due to difficult weather conditions and supply chain issues.
The sales development for rear mounted bike carrier products continued to be strong, especially the towbar carriers Thule EuroWay and Thule Xpress showed significant sales growth. The sales in the rooftop box categories were weaker than anticipated. This was partly weather-related at the end of the fiscal year and partly due to increased competition in the entry level of the rooftop box category. A new box model, Thule Pacific, is about to be launched early 2007 and is expected to offset previous weaker sales. The launch of the new premium towbar carrier, Thule EuroClassic G5, has been accelerated by several weeks in order to capture the full seasonal sales effect for the product.
The launch of the new rack assortment for professional users, Thule Professional, during the second half of the year was highly rated by its potential customer base. Sales start will take place during the first quarter 2007. The business unit RV Accessories (former Omnistor) maintained its market position despite tough competition and increased raw material prices, especially for aluminium.
The North American Car Accessories division reported sales of USD74.4 million (2005: USD68.4 million) during 2006, including SportRack sales of CAD 3.6 million. Thule continues to gain market share, based on reliable growth in the important outdoor and sports channel. A stream of new product launches, such as the European roof box Thule Atlantis, aimed at a broad customer base, will facilitate cross continental sales leverage opportunities. The growth in the western states is stronger than in the eastern part of the USA, Thule’s traditional home base. New growth opportunities have been identified for 2007 as a consequence of the launch of the Thule Professional load carrier solutions and assortment for Recreational Vehicles.
The North American market has been affected during 2006 by higher fuel prices and a more cautious consumption behavior. This has led to weaker sales through the automotive sales channels thus having an impact on Thule’s box sales which is strongly represented in that channel. However the trend to more SUV cross over vehicles has mid term a positive effect on Thule’s operations as it triggers the need for different transportation solutions to compensate for the decreased interior cargo capacity.
Since September, the SportRack Accessories operations have been part of the North American sales and product portfolio. The similar portfolio of SportRack with strong emphasis on Canada and on price entry level products will be used in addition to the Thule premium brand proposition. The integration process is finalized and sales and earnings growth in the SportRack operations are expected during the first half of 2007.
Sales in the Automotive Accessories operations amounted to SEK500 million (2005: SEK480 million). 2006 has been another year where intensive pressure among the customer base of global automotive companies has resulted in a continuous demand for further improvements among their suppliers.
It has been challenging for Thule to get fully compensated for the rapidly increasing raw material prices, especially aluminum. At the same time there has been a need to improve delivery performance for rack products from the Swedish rack unit in Hillerstorp. During the third quarter, Thule started to move the majority of all production flow groups for OES customers to existing facilities in Huta, Poland. The assembly unit in Poland is geared to live up to high demands from automotive customers while being situated in a cost efficient area close to important European markets. The introduction of the single piece flow assembly process at the UK site in Rotherham assisted in taking cost out of the supply chain and to improve operational efficiency.
Several new product launches, such as rooftop box for a premium German car manufacturer, a pick-up truck sidestep for Nissan Europe as well a new trim finisher for the Land Rover Freelander strengthened Thule’s reputation as being able to offer a wide range of premium transportation solutions in a very competitive environment.
The Trailers Division reported sales of SEK1,039 million (2005: SEK 849 million) and surpassed for the first time the one billion barrier. Thule’s trailer operations continue to show an organic sales growth around 20 percent for the third consecutive year. The operations integrated during 2006 the North American trailer operations, the Rental operations for anhaenger-center.com in Germany and the Italian Ellebi trailer operations, as part of the Brink acquisition.
Based on the well established component production hub in Wielen, Poland, where roughly 400 employees work for Thule, the division has leveraged the supply chain concept in combination with distinct assembly units close to its customers. The increasing proportion of sales outside Scandinavia means that Thule is now one of the three leading European trailer suppliers. Further sales penetration in home markets was assisted by successful launch activities in new markets such as France and Poland. 2007 is expected to witness a break through for European style galvanized trailers on the North American market, where the dramatic increase of aluminum prices and lack of snow have triggered a restructuring of Thule’s North American aluminum trailer portfolio.
Thule’s horse trailer product range made its foray into the Scandinavian market during 2006 and the category is now bound for new markets in the years to come. A launch in Germany is next in connection with a number of important fairs during the first half year.
Integration work with the Italian Ellebi trailer operations has started, previously part of the Brink acquisition. Synergies with other Thule entities and substantial profitability improvements are expected during 2007.
The Snow Chains operations reported sales of €37.6 million (2005:€33.1 million). The effect of three good consecutive winters has mainly contributed to the sales growth. Finished goods stock was emptied at the customer side and full replenishment took place starting from mid year. Additionally, the division has broadened its portfolio over the past two years. Snow chains for professional users in areas such as transportation, forestry and agriculture are less weather dependent and are able to better offset the strongly seasonal business for passenger cars. However, the current very mild winter has led to that the positive sales trend weakening during December. Production at the Italian site in Molteno has started to respond to softer demand.
The anticipated acquisition of Pewag Schneeketten was revoked during December and the filing at the EU commission was withdrawn. Thule is committed to further expand its snow chain operations by organic methods such as expanding into new geographies.
The Towing Systems Europe/Asia Division (formerly Brink International) is part of the Thule Group since September. Its premium offer of towing solutions for the aftermarket and selected OEM customers had strong sales development during the year. Reported sales were €33.6 million during four months as part of Thule.
After a slow start, the operations gained and kept momentum during the year. Innovations such as the first retractable towing system for the European aftermarket were very well received in the market place. The shift to higher end towing systems with more technology content is expected to continue and will benefit Thule as a technology oriented company. The integration with Thule has started and visible results are expected for 2007 when the newly created business area Towing Systems also takes over responsibility for the former Division Automotive Accessories.
The North American arm of Thule’s towing operations is the Towing Systems North America Division which reported sales of $26 million during the first four months within the Thule Group. Thule’s North American towing operations are in a turnaround mode where new management and a detailed action plan aim at substantially improving profitability during the next two years. A combination of internal efficiency programs including sourcing and harmonization of specifications as well as new sales and marketing initiatives have created a positive momentum in the organization. The cooperation with Thule’s European towing operation has started and an exchange of technology is scheduled for 2007.
Outlook
The acquisitions of Brink, SportRack and Valley have marked a major transformation for the Thule Group. 2007 will maintain a strong focus on delivering improved cash-flow in all business segments to finance further growth for the Group. The integration of the acquired companies is of high importance and will be supported through a more customer centric organization, valid from March this year. The former divisions have been renamed into business areas. The snow chains operations and automotive accessories operations will be part of business area Car Accessories Europe/Asia and business area Towing Systems Europe/Asia respectively.
Thule will continue to pursue its growth strategy in 2007 and is geared to reach its target of becoming a one billion Euro turnover company by 2009.
Key ratios (SEK M)
|
MSEK |
Jan - Dec |
|
|
2006 |
2005 |
2004 |
|
|
|
|
|
|
Sales |
4 217 |
3 160 |
2 785 |
|
Year-on-year growth |
33,4% |
13,5% |
26,8% |
|
Year-on-year growth, currency adjusted |
33,5% |
12,0% |
29,4% |
|
|
|
|
|
|
Operating profit before depreciation of excess value (EBIT Operational) and before one-off items |
493 |
395 |
355 |
|
% of Sales |
11,7% |
12,5% |
12,7% |
|
|
|
|
|
|
Depreciation Excess value |
-9 |
-5 |
-5 |
|
Amortization Excess value |
-34 |
-11 |
0 |
|
One-off items |
-62 |
-13 |
6 |
|
|
|
|
|
|
Operating profit (EBIT Statutory) |
388 |
365 |
356 |
|
% of Sales |
9,2% |
11,6% |
12,8% |
|
|
|
|
|
|
Investments |
109 |
92 |
136 |
|
|
|
|
|
|
Average number of employees |
3 905 |
2 332 |
2 100 |
Malmö, February 21st, 2007
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 & President, cell-phone: +46 (0)703 414150
Daniel Oelker, SVP Corporate Communication, cell-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 3,900 employees at over 30 production and sales locations in all major car markets in North America, Europe, Africa and Asia. Sales for 2006 amounted to 4.2 billion SEK. Thule AB is based in Malmö, Sweden, and majority owned by UK-based private equity firm Candover. More information at www.thule.com.