Posting strong revenues for 2017, the Thule Group said it had a “fantastic” year as it managed to broaden its product offering for future growth, especially in the Packs, Bags & Luggage category. The management added that it is looking forward to an “exciting” 2018, and is currently ramping up its production for the high season in the spring.
In constant currencies, the Swedish-based company's revenues for the fourth quarter grew by 6.5 percent from the year-ago period to 1,006 million kronor (€101.4m-$126.4m). The company also improved its underlying Ebit margin by 6.5 percent. For the full-year, sales reached SEK 5,872 million (€591.6m-$737.7m), which represents a 9.5 percent increase from the previous year in constant currencies. The underlying Ebit margin jumped by 18.2 percent.
By region, the positive trend for Europe & Rest of World seen in previous quarters continued, with currency-neutral revenues up by 9.1 percent in the fourth quarter to SEK 628 million (€63.3m-$78.9m) and by 12.7 percent to SEK 3983 million (€401.3m-$500.4m) for the full year. The performance in Eastern Europe and Asia made a particularly strong contribution.
Within Europe & Rest of World, sales are divided in four categories. Active with Kids grew by 45 percent for the year, RV Products grew by 27 percent for the year and Sport & Cargo Carriers registered a sales increase of 8 percent.
However, there was a 2 percent decline in sales in Packs, Bags & Luggage. The management blamed this on lower Christmas sales, but said it is taking a positive view of the increasing share of sales in this division taken by its new luggage and sports bags products, which it said will provide long-term growth in this category. In particular, the management highlighted the successful launch of the Thule Subterra luggage series.
Thule has also been launching many new products in this segment, including some new hiking backpacks such as the Thule AllTrail, which can also be used every day. It has also introduced a series of bike hydration packs with some patented solutions, called Thule Vital.
In the Americas region, sales rose by 2.5 percent for the quarter and by 3.7 percent for the full year in constant currencies. The product category trends are similar to those in Europe & Rest of World. However, the region had lower sales in Packs, Bags & Luggage, which were down by 4 percent for the full year. The management said that sales in the constantly shrinking sub-category of Legacy/OE products - such as CD cases, camera bags and cases for medical equipment - continued to decline rapidly.
Across the group, the gross margin for the quarter jumped by 1.7 percentage points to 39.6 percent, as increasing raw materials costs were more than offset by an improved product and customer mix. For the full year, the gross margin inched down by 0.2 percentage points to 41.4 percent, mainly due to higher raw material costs.
During the fourth quarter, production began at Thule's second assembly plant in Poland, based in Pila. It will allow the group to expand its production capacities in the Sport & Cargo Carriers category and to handle the manufacture of products that were previously subcontracted in the Active with Kids and Packs, Bags and Luggage categories. The factory will initially employ 100 people with the possibility of rising to 500.
The company's net income was negative in the fourth quarter, with a loss of SEK 41 million (€4.1m-$5.1m) against earnings of SEK 37 million for the same quarter of 2016. As other companies operating in the U.S., it was charged with the impairment of deferred tax receivables amounting to SEK 114 million (€11.5m-$14.3m), resulting from the tax reform passed in the U.S. in December.
On the other hand, Thule's net income was positively affected by tax revenues of SEK 37 million (€3.7m-$4.6m), related to the reversal the set aside of an amount because of disputes with the German tax authorities, which have now been settled. For the full year, net income went up by 4.6 percent to SEK 690 million (€69.5m-$86.7m).