Accell Group has reported that bike sales in May rebounded after weak March and April sales. In parallel, Europe’s leading bicycle firm noted that it has arranged an additional credit facility. This is a ‘precautionary action to secure robust access to liquidity in light of the uncertainty and volatility caused by the COVID-19 pandemic.’
Ton Anbeek, CEO at Accell Group said “The strong recovery of bike sales in May is clearly a very positive development, yet we are still trailing behind last year’s numbers. The duration and impact of COVID-19 currently remains unpredictable and we anticipate that our 2020 results will be hampered by the ongoing disruptions in the global supply chain.
“The current uncertain environment requires us to be more prudent and this is also why we are glad to have improved our financial buffer. At the same time, we are excited to see so many European governments, cities and consumers embrace cycling post lock down, which contributes to a bright future for our brands and our business in the post-COVID-19 era.”
Due to the various lockdowns and subsequent shop closures in several countries, group revenue in March and April came in approximately 27% lower compared to last year. At the end of April shops started to reopen in Germany, the company’s biggest market.
In the second week of May the majority of all bike shops in Europe reopened. Group revenue growth in May was +23% year on year, bringing YTD May net sales to -5%.
Based on lower YTD net sales level which entailed some adverse mix effects and due to higher costs related to the supply chain disruptions (as a result of COVID-19) YTD EBIT (earnings before interest and tax) came in at €28 million, approximately 40% behind last year.
In order to meet the surging demand for e-bikes, e-MTBs and e-cargo bikes in its markets, Accell Group increased production again from 30% in March to 70-80% of capacity taking into account the social distance requirements for staff within its production facilities.
The company anticipates ongoing global supply chain disruptions caused by the COVID-19 outbreak to hamper product availability in the second half of 2020 and to cause delays in the planned introductions of new bicycle models.
The rebound of bike sales in May combined with cash management measures implemented since the end of March have resulted in an improved cash position. Yet, given that the bicycle business is typically seasonal, and to ensure sufficient funding headroom going forward in a still unpredictable environment, the company agreed an additional two-year bank facility of €15 million with its bank consortium under the Dutch GO-C scheme.
The facility will be partly drawn in 2020 (€60 million) and the remainder is available until April 1, 2021. It mainly serves as an extra financial buffer in the case the impact of COVID-19 lasts longer and turns out to be more severe.
Dividend limitations will be applicable as long as the GO-C is drawn; and as a consequence, no dividend will be distributed over the 2020 financial year.
Well-known bicycle brands in Accell Group’s portfolio include Haibike, Winora, Ghost, Batavus, Koga, Lapierre, Raleigh, Sparta, Babboe and Carqon. XLC is its brand for bicycle parts and accessories.
Accell Group employs approximately 3,400 people across 18 countries. Its bikes and related products are sold to dealers and consumers in more than 80 countries. In 2019, it sold around 943 thousand bicycles and recorded a turnover of over €1.1 billion.
