Thule reported that its sales increased 19.5% in the first quarter and 13.4% on a currency-neutral basis. Net sales for the quarter were SEK 3,034 million ($309 million), compared to SEK 2,538 million a year ago.
The operating result amounted to SEK 692 million compared to SEK 594 million a year ago), corresponding to a margin of 22.8% (23.4% a year ago). Adjusted for exchange rate fluctuations, operating margin increased by 0.4 percentage points.
Net profit amounted to SEK 527 million, compared to SEK 447 million a year ago. Cash flow from operating activities totaled an outflow of SEK 526 million compared to an inflow of 72 million a year ago.
The first quarter statement from Magnus Welander, CEO and President of Thule, reads as follows:
Events around the world were overwhelming in the first quarter of 2022. Russia’s invasion of Ukraine continued to challenge global supply chains and substantial cost increases affected all of us. Given this situation, I am very pleased that we continue to increase sales with unchanged high profitability.
Sales growth in the first quarter was 20% (13% after adjusting for exchange rates) compared to the extremely strong first quarter of the previous year.
We managed to offset the effects of more expensive raw materials, higher freight prices and increased sickness absence through higher prices and efficiency measures. We posted an EBIT margin for the quarter of 22.8%, which corresponds to an improvement of 0.4 percentage points year-on-year.
Good start in Europe and RoW
Following Russia’s invasion of Ukraine, we have implemented an immediate halt to sales to Russia and Belarus. For natural reasons, our partners in Ukraine have not purchased any products since the start of the invasion. These events are profoundly tragic on a human level. However, the financial impact on the Thule group is limited since these countries represent less than 1% of our sales. Moreover, we do not have suppliers in these three countries.
In the quarter, sales in the region grew 9% on a currency-adjusted basis, compared to an exceptionally strong first quarter a year earlier. It is positive to note that all four product categories grew during the quarter.
The markets that grew the most during the quarter were Germany, Belgium, the Netherlands, France, the Czech Republic and Spain. In the southern hemisphere, Australia, New Zealand and South Africa, in particular. continued to perform well as these countries concluded their important summer seasons.
Very strong growth in the Americas region
In the Americas region, compared to the exceptionally strong first quarter of 2021, the company still recorded year-on-year sales growth of 27% in the quarter after adjusting for exchange rates. We made progress in all four product categories and in all markets in the region and where Canada particularly excelled.
Increased capacity and higher inventory levels
As previously announced, we are investing significant resources to further expand our production capacity to meet the substantial increase in sales. We are pleased with the progress of projects, despite longer lead times for everything from construction materials to automation equipment.
We have, with increased capacity, been able to better meet the increased demand during the fall and the beginning of the year. We therefore estimate that retail inventory levels are back to similar pre-peak equilibrium levels as before the pandemic.
To ensure high delivery reliability and short delivery times also in the future, we continued to build up stock levels in the quarter before the spring season. At present, higher inventory levels are required to flexibly manage significantly extended delivery times of various components, as well as to anticipate any major delays in the global supply chain. Inventory accumulation includes components for high volume products.
Positive long-term trends for current categories and new categories in the works
The underlying market trend of consumers seeking active living close to home remains stable and positive. Over the next few years, we expect overall market growth for our existing product categories to be in line with pre-pandemic growth, i.e. around 3-4%. Our ambition remains to gain market share and continue to outpace market growth in our current categories.
We will begin growth journeys in two additional product categories in 2023. I look forward to showcasing them at Capital Markets Day in Hillerstorp, Sweden on Wednesday, May 11. We will also be showcasing our modern roof rack factory, our recently opened global development. and our expanded, world-leading Thule Test Center.
Photo courtesy Thule