Business news : Accell Says Raleigh, E-Bikes and P&As Drive Double Digit 2012 Sales Growth

Accell Group N.V. reported sales increased 23 percent to €772.5 million ($993 mm) in 2012, from €628.5 million in 2011, including €123 million ($158 mm) from the acquisitions of Raleigh, Currie and Van Nicholas and partly due to rising sales of e-bikes and parts and accessories.

Organic sales growth came in at 3 percent or the year and 5 percent in the second half. The net operating result for the full year 2012 came in at €26.3 million ($34 mm), down 17 percent from the €31.7 million reported in 2011 and in line with previously given guidance.

“For Accell Group, the year 2012 was largely dominated by the acquisition of Raleigh,” said René Takens, CEO of Accell Group. “This move meant we added brands to our portfolio that are known across the world, and also strengthened our position in the USA and the United Kingdom in particular.”

Bicycle Sales grew 19 percent to reach €553 million ($711  mm), with 2 percent of growth being organic, sales of bicycle parts and accessories growing 40 percent, with 8 percent of that being organic. The acquisitions of Raleigh, Currie and Van Nicholas accounted for the balance of the growth.

Acquisitions raised the number of bicycles sold to 1,605,000, from 1,115,000 in 2011. The acquisitions of Raleigh and Currie led to a drop in the average price per bicycle to €345 ($444), from €417 in 2011. In relative terms, Raleigh sells more mountain bikes and racing bikes in the mid segment of the market. In organic terms, the average price per bike increased.

Sales of electric bicycles were up 23 percent and now account for 32 percent of total sales in bicycles. Sales in sports bikes was up 21 percent and in traditional bikes up 14 percent. The result from this segment as a whole dropped to €48.8 million ($63 mm), from € 52.8 million in 2011. In many countries, growth remains under pressure from the persistent reluctance among retailers to hold stock in their stores, partly due to their limited financing options.

Country breakdown<

In its native market of the Netherlands, sales from bicycles fell 7 percent in 2012, compared with a market drop of 13 percent. Sales in bicycle parts & accessories was up 3 percent. Reduced consumer spending (partly as a result of the economic developments in Europe), as well as and particularly rainy weather in the spring, had a negative impact on bicycle sales in many European countries, especially in the months of May and June. Price increases, reduced discounts and higher sales together resulted in an organic increase in sales (5 percent) in all our key countries in the second half of the year.

The company said margin improved in the second half of the year but remained under pressure as the company was unable to fully pass along higher VAT rate introduced in October. Added value (net sales less material costs and inbound transport costs) as a percentage of sales slipped 120 basis poins to 31.9 percent as unfavorable exchange rates offset lower discounts and air freight costs.

In view of the market developments in the Netherlands, Accell Group is evaluating how it can further combine activities among its Dutch companies. The company expects to be in a position to report on Accell Group’s progress and any impact this may have on employment before the end of the quarter.

In the United States, the market increased by approximately 6 percent thanks to the addition of Raleigh, which owns the Diamondback brand, which has a strong position in specialist sports store chains. Accell Group has initiated the integration of the parts and accessories sales and distribution of Raleigh and Seattle-based SBS. The recently announced closure of the factory in Canada is going according to plan.

In Germany, the greatest increase in sales was recorded. Bicycle sales were up 8 percent and sales in bicycle parts and accessories rose by 6 percent. The mood in the market is positive. In Germany, national and regional authorities are strongly promoting cycling and electric bikes are gaining in popularity. Total sales of electric bikes in the German market are now estimated at 350,000 – 400,000 annually. The increase in the number of electric bikes sold also led to an increase in the average bicycle price.

In France, sales grew 4 percent. Sales from bicycle sales was down (-7 percent) due to a weak market. Sales in bicycle parts and accessories in France rose by 22 percent in 2012. The e-bike market in France remains small. Accell Group is developing products suitable to boost market growth.

Sales in other countries increased both within and outside Europe. The addition of Raleigh boosted sales in the UK and the USA. In the UK, cycling is currently very popular as a possible mobility solution and for health and fitness. Synergies are being realised in the UK through the integration of other smaller Accell Group activities.

Sales in the fitness division, which has been downsized considerably in recent years, came in at € 21.4 million in 2012, a similar level as in 2011.

Electric bicycles, P&A drive growth
In 2012, bicycle sales in a number of European countries including the Netherlands came under pressure as a result of reduced consumer spending and the fact that consumers postponed purchases of durable goods, including bicycles. The electric bicycle, however, continued to gain in popularity, both in the Netherlands and abroad, especially in Germany. The increased sales in this segment means it now accounts for 32 percent of Accell Group’s total sales in bicycles.

In addition, sales in bicycle parts and accessories also showed healthy growth. In this segment, consumers are putting off new bicycle purchases, they are investing in the maintenance of their existing bicycles. Following a moderate first half of the year, results improved in the second half of 2012 when compared with the same period of 2011.

Organic growth came in at 5 percent, while sales growth including acquisitions came in at 28 percent in the second half of 2012. The net operating result was in line with previously given guidance. The 2011 result was boosted considerably by the € 16 million book profit on the sale of the stake in Derby Cycle (Germany).

The year ahead

In order to be well positioned for future growth following the Raleigh acquisition, Accell fully refinanced the company when it acquired Raleigh. In 2013, it will focus on integrating Raleigh to enhance economies of scale and will be actively seeking potential acquisitions.
“Barring unforeseen circumstances, we expect an increase of sales and net operating result in 2013,” said Takens. “In addition to the organic growth in profit, further contributions will also come from synergies resulting from the cooperation between Accell Group companies and Raleigh.”

“In view of macro-economic developments, Accell Group expects the hesitancy among consumers tomake major purchases to continue for the foreseeable future. Also the market is expected to remain highly dynamic,” the company said. “As in previous years, more movements in consumer demand across the season are foreseen. Since our brands operate close to their markets, Accell Group can adapt to changing consumer demands relatively quickly.

“On the basis of the above-mentioned developments and barring unforeseen circumstances, Accell Group expects to record higher sales and net operating profit in 2013, compared with 2012.”

Accell Group Financial Results

(amounts in € * 1,000) 2012		2011
Net sales	772,546		628,475
Cost of raw materials and auxiliary materials	(526,183)		(420,246)
Staff costs	(101,552)		(80,642)
Depreciation and amortisation	(8,300)		(7,355)
Other operating costs	(100,562)		(83,124)
(736,597)		(591,367)
Acquisition costs	(3,443)		0
NMa fine	0		(2,307)
Operating profit	32,506		34,801
Result of partcipations	0		16,079
Result of associates	188		356
Financial income and expenses	(6,953)		(7,845)
Pre-tax profit	25,741		43,391
Taxes	(2,574)		(3,114)
Net profit	23,167		40,277

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( Source SportsOneSource )