Leading European bike business Accell Group NV – which owns brands such as Raleigh and Van Nicholas, alongside Koga and Lapierre amongst others – has reported strong revenue and profit gains in the first half of 2013. This follows a strong performance in the first quarter of 2013.
Accell Group recorded turnover of €503.8 million in the first half of 2013, an increase of 13% compared with the €445.6 million recorded in the first half of 2012. Of the total growth, 7% was organic. Operating profit was up 19% year on year at €35.5 million, from €29.8 million in the first half of 2012.
René Takens, CEO of Accell Group said “The bicycle is popular and cycling is on the increase. This has not resulted in an immediate increase in sales, and a number of bicycle markets are showing a decline; however Accell Group still managed to record an increase in turnover in the first half of 2013.
He added, “All the countries in which Accell Group sells its bicycles and bicycle parts had to deal with the consequences of an unfavourable (cold) spring and a further decline in consumer confidence. This put bicycle sales below the levels we expected, but the overall level was still above that of 2012. This is a clear sign the bicycle sector is performing quite well compared with other consumer product segments.
“One of the main reasons for this is the growing popularity of cycling. Cycling is healthy, fun and offers easy mobility. In declining markets Accell Group adjusts its organisation; the reorganisations in the Netherlands and in Canada are on schedule. Due to market developments in North America and the UK the Raleigh companies are not yet showing the anticipated growth, albeit the integration is in full swing.”
Takens continued, “For the remainder of the year we expect a continuation of the trends and revenue growth. We expect to report a higher year-on-year operating profit compared to 2012.”
Key developments in the first half of 2013
- A significant proportion of Accell Group’s 7% organic sales growth came from Germany
- The main sales drivers came from sales of electric bicycles and bicycle parts and accessories.
- Sales of sports bicycles remained stable while sales of traditional bicycles were lower in most European countries and the United States due to adverse weather conditions and a continuing reluctance among consumers to make major purchases.
The previously announced reorganisation in the Netherlands and the combination of the bicycle
production for Batavus and Sparta is progressing on schedule. Accell Group expects to complete the reorganisation, which will result in the loss of 45 jobs, in the summer of 2014 and expects the reorganisation to result in structural cost savings of €2 million to €3 million annually.
Accell Group will include a one-off charge of around €2 million for the reorganisation in its results for the second half of 2013.
- The total number of bicycles sold rose to 1,115,000 in the first half, from 942,000 in the same period of 2012, on the back of the acquisition of Raleigh in April 2012. The number of bicycles sold was down 2% in organic terms.
- The average sales price fell to €345, compared with €352 in the first half of 2012, due to a greater contribution to turnover from Raleigh. Organically the average price rose by 11% to more than €390 due to a change in the product mix and price increases.
- The profit for the segment rose to €43.1 million, from €37.0 million in the first half of 2012.
- Sales of electric bicycles came in 28% higher, mainly in Germany, the Netherlands, Switzerland and Denmark. Here, the average sales price rose to €1,277, from €1,153 in the first half of 2012.
- Sales of sports bicycles increased by 12% and sales of traditional bikes were up 8% as a result of the addition of Raleigh. In organic terms, sales of sports bikes remained stable, while sales of traditional bicycles dropped by 4%.
Key countries for Accell
- Provisional figures show that the Dutch bicycle market has remained stable in the first few months of 2013 when compared with the same period of 2012. Turnover of Accell Group bicycle brands was up 2%. Turnover in bicycle parts & accessories was up 4%.
- The German bicycle market fell slightly in the first half mainly due to bad weather, while sales of electric bicycles were up. Turnover of Accell Group bicycle brands was up 12%, while sales of bicycle parts & accessories were up 8%.
- Poor weather conditions in North America resulted in disappointing sales in the bicycle sector and total supplies to specialist retailers in the market were 15% lower than in the first half of 2012. Accell Group bicycle brands saw their deliveries to specialist retailers ‘perform less bad than the market.’
Turnover of the Accell Group bicycle brands and bicycle parts increased due to the acquisition of Raleigh. The company noted that ‘the decline in organic turnover was slightly less than the overall market decline.’ Accell Group announced in the first half that its companies in the US will cooperate more closely and Accell Group will continue with the integration process in the second half of the year.
In Canada, as announced in the beginning of the year, Accell Group terminated the production and assembly activities in Waterloo (Quebec) as of the end of June 2013.
According to Accell Group, which acquired Raleigh in 2012, continuation of manufacturing and assembly activity in Waterloo is no longer economically viable.
The sales organisation has been adapted, which will now focus entirely on the specialist retail and multi-sports channel, as Accell Group does in the US.
The premises in Oakville (Ontario) have been sold. The reorganisation will make a positive contribution to Accell Group results from 2014.
Accell Group’s main other European markets are France, the UK, Belgium, Switzerland, Austria, Scandinavia, Italy and Spain. Turnover was up in all of these countries. The growth was largely due to higher turnover in bicycle parts and accessories and electric bikes. The rise in the UK was largely driven by the acquisition of Raleigh and growth in bicycle parts.
The company’s main markets outside Europe are Turkey, Australia and countries in South America and Asia. Turnover in most countries increased. Turnover also includes the licensing income from Raleigh bicycles in these regions. The reduction in the turnover reported in other countries was due to a change in the way the turnover of Raleigh’s trading company in Taiwan is accounted for.
Outlook & future market expectations
The ongoing macro-economic developments and the weather remain difficult to predict for the second half of 2013. Furthermore, Accell noted that sales fell short of expectations in the last few months, whereby it is expected that for the second half of 2013 some more discounts must be granted with regard to this season’s collections, as compared to last year.
For the full year, Accell Group expects to record a year-on-year increase in operating profit. The net operating profit is expected to come in at approximately the same level as in 2012, barring unforeseen circumstances, whereby the financing costs and taxes will be higher compared to 2012.
Accell Group expects continued growth in turnover and profit in the longer term.
