Accell Group Profit Up By 20%

HEERENVEEN, the Netherlands – The acquisition of Ghost and good sales of bicycle in the higher segment increased Accell Group’s turnover by 11% to €306 million over the first half of 2008. The organic growth amounted to 6% (1st half of 2007: 10%). The net profit from ordinary operations increased by 20% to €19.3 million.

“In many European countries, especially in Germany and France, the sales of bicycles increased”, says René Takens, Chairman of the Executive Board of Accell Group. “We are benefiting from an increased awareness of health, the environment and leisure time. The significant rise in oil prices also induces consumers to search for alternative means of transport. For 2008 we anticipate a higher turnover and an increase of net profit from ordinary activities by approximately 10%.”

Pedelecs

“In the first half of 2008 we realised a sound organic growth, especially given the exceptionally good weather in the first half of last year. Especially bicycles in the higher segment, such as the electric bike, both in the Netherlands and in the rest of Europe and sporting bikes were much in demand these past six months, which contributed to an increase of our operating margin to 9.9%.

In the first half of 2008 sales in the bicycles / bicycle parts & accessories segment increased by 12% to €288.2 million (1st half of 2007: €256.6 million). Accell group managed to sell 12,000 bikes more in the 1st half of 2008 related to 2007. This number was tempered by the decision of Mercier not to sell bicycles to hypermarchés in France anymore. However, this was offset by the acquisition of Ghost in the first quarter of 2008. Due to the change in product mix the average price rose to €413 (1st half of 2007: €378).

Accell Group reports a sound half year for the Dutch bicycle brands Batavus, Koga and Sparta. “While the weather conditions were back to normal compared with the exceptional weather in 2007, sales of the Dutch brands continued to grow. In particular, the sale of electric bicycles increased, although this had a somewhat dampening effect on the sale of regular bicycles.”

Germany and France

“In Germany the turnover of the integrated Winora and Hercules organization increased in the past half year. The custom-made programmes of Winora and Hai contributed to growth as well. The increase in sales of parts and accessories in Germany and France was again sound.”

“Ghost sold more bicycles than during the comparable period of last year as well. The German market shows a growing interest in sporting bicycles. In addition, there is plenty of interest in bicycles as a potential solution for mobility and environmental issues.”

“In France, our top brand Lapierre had a good first half-year. This growth may be attributed to both the home market and an increase in exports. Where last year it still supplied bicycles to the hypermarchés, Mercier only assembled bicycles for Lapierre and JC Decaux in the first half of 2008. Compared with the first half of 2007 the turnover of bicycles and parts for the bicycle projects of JC Decaux increased.”

“Against the background of the credit crisis, high oil prices and pressure on consumer spending, turnover of Seattle Bike Supply (SBS) in both bicycles and parts continued to grow in the first half year. The distribution of Lapierre via the SBS dealer network in North America also continues to grow.”

Higher level of stocks

As a result of parts that are purchased to increase the production of electric bicycles in the summer months June, July and August Accell Group is reporting a higher level of stocks. The effect of higher stocks for the production of electric bicycles is approximately €6 million at the end of June 2008. The stocks at the fitness division are approximately €3 million higher due to lower than anticipated turnover.

Outlook 2008

“We will continue to profit from the current and durable trends in society in the area of health, mobility and the environment. The impact of continuously increasing oil prices may be an extra inducement for consumers to use alternative means of transport, such as the bicycle”, says Takens. “Barring unforeseen circumstances, we expect a higher turnover for the full year 2008 and an increase of net profit from ordinary operations by approximately 10%.”