CEO Comments

A very successful year and focused operations moving forward

The decision to initiate the process of divesting the toolboxes for pick-up trucks business means we can now place all our focus on growth in sports and outdoor products.

2016 was a very positive year and successful product launches were the most important factor driving continued stable sales growth of 5.5 percent and achieving an EBIT margin of 17.3 percent. The improvements of our distribution structure continued during the year. These changes will mean a more cost-efficient supply chain and improved service to our customers as well as reduced environmental impact.

Strong growth in Outdoor&Bags

In the fourth quarter, the Group’s smallest in terms of sales, the Outdoor&Bags segment increased sales to SEK 944m, up 2.7 percent after currency adjustment. For the full-year, sales growth was in line with our long-term financial targets for organic growth and increased 5.0 percent after currency adjustment. We are extremely pleased with the growth in the two largest product categories: Sport&Cargo Carriers and Other Outdoor&Bags. However, the decline in sales in the Bags for Electronic Devices category was a disappointment.

Sport&Cargo Carriers strong in Europe

The growth in Sport&Cargo Carriers (up 5.3 percent after currency adjustment) was driven by Region Europe & ROW, while sales in Region Americas remained on a par with last year. The US market was impacted by a soft outdoor sector during the year, following the bankruptcies of two store chains in the spring, and by caution in the bike category.

In 2017, we intend to drive growth in this key category and to strengthen our existing market-leading position by launching a multitude of new, exciting products, broadening the investment in the Thule Retail Partner program for retailers and by leveraging the improvements made in distribution.

New products drive Other Outdoor&Bags

With rapid growth in all product categories and total currency-adjusted growth of 26 percent during the year, Other Outdoor&Bags is now our second largest product category (18 percent of sales in 2016).

Our Europe-focused RV Products category grew quickly in a strong motorhome market, which is a positive trend we expect to continue in 2017. Our growth in the Active with Kids category was strong for all product groups. The acquisition of GMG B.V. in the summer makes us even stronger in child bike seats and, together with the launch of an entirely new family of multisport trailers in spring 2017, generate a very positive outlook for us in this category. A broader product portfolio in the fast-growing Sport&Travel Bags category means that we are very optimistic.

Tough market in the bags category

Some product groups in Bags for Electronic Devices have continued to be exposed to tough market conditions (camera bags and tablet cases), and the 13 percent decline in sales was larger than expected. Growth in the prioritized smaller backpacks category was one of the bright spots in a tough market.

Great performance in Region Europe & ROW

Region Europe & ROW drove the Group forward in 2016, with currency-adjusted sales growth, excluding the acquisition of GMG B.V., of 7.1 percent in the quarter and 10.0 percent for the year.

Sales in Region Americas was in line with expectations during the quarter (down 5.1 percent after currency adjustment). For the full-year, sales decreased 4.2 percent after currency adjustment, but despite this, we maintained our market share.

Strategic review of Specialty completed

We have started the sales process for the main part of the US Work Gear operations, namely toolboxes for pick-up trucks. These operations, which had sales of SEK 307m in 2016, have operated separately with a dedicated factory in Florida and with sales under the UWS brand and as a private label.

Moving forward, we will integrate two smaller product groups that were previously reported under Specialty (racks and smaller accessories for pick-up trucks) in our Sport&Cargo Carriers category, since they have a strong technical connection to this category and are also used by consumers for leisure activities.

An exciting year lies ahead of us

Having closed the chapter on a strong year, a wealth of exciting product launches and a streamlined company, we look forward to continued sales successes in traditional and new categories.

Malmö, February 2017

Magnus Welander
President and CEO Thule Group

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