The additional 15 percent duties imposed by the U.S. in July on a variety of products coming from China have led several U.S. retailers to reduce their inventories and to some extent resulted in higher prices that have impacted consumer spending, said the Thule Group to explain a 2.0 percent decline in its sales in the Americas on a constant-currency basis during the third quarter of this year.
The drop occurred in spite of higher sales in Latin America during the period. For the first nine months of the year, sales were stable in the Americas region. It should be noted, however, that the Swedish group has been performing less well in the region than in other parts of the world in recent years.
Thule indicated that it may have to make organizational changes in its U.S. operations.
In Europe and the rest of the world, Thule's sales enjoyed continued growth in the latest quarter, increasing by 6.4 percent in local currencies. The company mentioned in particular strong sales of bags in Asia and growth in the Nordic countries and Russia after a weak start of the year.
Thule's sales of roof racks went up in Europe and the rest of the world, after a downturn in the spring that was due to a disposal of inventories of a previous generation of products. The company mentioned “healthy” sales in its Recreational Vehicles segment but noted that it had to recall two models of motorized awnings for safety reasons.
The group's total sales increased by 7.7 percent to 1,682 million Swedish kronor (€157.8m-$174.7m) in the quarter, rising by 3.9 percent in constant currencies. The gross margin dropped by 0.7 percentage points to 38.5 percent. The operating margin declined by 0.8 percentage points to 16.3 percent, and it was off by 1.4 percentage points excluding currency effects.
Net earnings more than doubled in the quarter to SEK 339 million (€31.8m-$35.2m), aided by foreign currency translations and exceptional items. On an adjusted basis, they declined by 4.2 percent to SEK 181 million (€17.0m-$18.8m).
For the first nine months of the year, the underlying Ebit margin was down by 0.4 percentage points to a still healthy level of 20.2 percent, due to the U.S. tariffs and, even more, to the low capacity use of its assembly plants.
The management said it will continue to focus on efficiency measures at its factories while expanding its global development center in Sweden.