Accell Aims to Sell American Activities
HEERENVEEN, the Netherlands – Today Accell Group has announced that it is considering the sale of its American activities. Accell North America Inc. (ANA) is continued in a separate entity for non-core activities. Besides a sale of the activities, a restructuring is also possible. As the main reason for this measure, Accell Group says that it wants to limit the impact of ANA’s losses of the holding company’s 2018 profits.
Like many other operators on the U.S. market also Accell Group is having a hard time here. This even urged the Amsterdam stock listed company to issue a profit warning in November 2017.
In that year ANA’s turnover dropped by 14.4 percent to 102 million euro (9.5 percent of Accell Group total 2017 turnover of 1.068 million euro). This was due to “Reduced sales via the multi-sports retail channel and the termination of the of ANA’s P&A activities,” said Accell Group in its 2017 financial report that also mentions sales growth of the company’s Haibike, Raleigh and IZIP e-bikes. Next to these brands also Redline, Torker and Diamondback branded bikes are sold in the U.S. and Canada as well as XLC branded components. Accell Group’s 2017 financial report also stated that for 2018 it expected “An improvement in the results in North America on the back of the omni-channel strategy and the strong growth of the e-bike market.”
CEO Anbeek ‘Justified decision’
That result improvement clearly didn’t happen in the 11 months of 2018 on which the today by Accell Group published press release reports. On this Dutch financial publications state that it was Accell’s goal to have its American activities run break-even before the end of the year and to critically review this division if that did not work out. “It will take another two to three years until we break even here. So this choice is justified,” says CEO Ton Anbeek. The Accell Board will take a final decision on the U.S. activities in the next six to nine months.
Anbeek’s intervention in the U.S. is mainly caused by the fact that ANA’s losses are to take a big (close to 40 percent) bite of Accell Group’s 2018 operating result (EBIT). Preliminary figures for 2018 show that excluding ANA’s losses Accell Group 2018 operating result will come in at about 51 million euro. ANA’s losses are forecasted to amount to 20 million euro. In its preliminary financial report on the 11 months of 2018, Accell Group states that ANA’s sales dropped to around 6 percent of its total turnover.
Execution of new strategy is on track
Furthermore, Accell Group’s guidance on its 2018 financial performance reports a net sales growth YTD November (excluding U.S.), of 6 percent vs the same period last year. “The Group EBIT-performance for the core business will be around 51 million euro and 57 million excluding extraordinary expenses.”
It is also reported that the execution of Accell Group’s new (omni-channel) strategy is on track. The highlights here are:
- Strategic brand portfolio per region established through 10 sharpened brand positionings providing clarity and guidance for innovation, communication and distribution
- 10% higher order portfolio in the Netherland based on signed dealer contracts versus ultimo 2017
- 3-pillar omnichannel strategy with ecommerce platforms and experience centres currently being rolled-out
- Centralisation of Parts & Accessories business fully in place in order to capture growth opportunities also driven by own brand XLC
- Customer Relationship management implementation started, enabled by Salesforce
- ERP vendor selection finalised and master dataprogram and ERP roll out kicked off in Q3 2018
- Standardized product platforms established; complexity reduction target by sku and model set at minus 40% by end of 2019
- Central procurement team fully in place; 75% of all components now sourced centrally.
‘Considering future options for US’
Ton Anbeek, CEO of Accell Group comments further with “Now that our management board is complete, we are stepping up the pace in executing our growth strategy. We’ve invested time and money in our move towards an even more focused and more consumer centric company. This allows us to bring our innovations more in line with consumer trends and demand. In addition, it allows us to reach consumers in a more effective way through more effective distribution. We need to be where the demand is, with the propositions that consumers are looking for. We can see that for our core business we are effective in the majority of the markets where we operate, resulting in growth and good margins. We have decided to run our US activities as a separate and non-core entity. This means that we need to reconsider and decide on our US activities in the next 6 to 9 months, apart from improving the results of the US business. While considering future options for the US will require our attention, we expect these measures to free up management time, allowing us to focus more on the further execution of our growth strategy. Looking at the underlying results of the company, we are confident that we are taking the rights steps. It gives us comfort and confidence to reconfirm our 2022 strategic and financial objectives.”
These objectives are an increase in turnover to 1.4 billion to 1.5 billion euros and becoming more profitable with an EBIT/Turnover of 8.0 percent and ROCE of over 15 percent.
Accell shares were up 1 percent to close to 19 euro by noon today.