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First Half Year Results Point to Accell Partly Delivering on its New Strategy

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HEERENVEEN, The Netherlands – In the first half of this year Accell Group saw its e-bike sales grow by 16 percent unit-wise and 47 percent in value. This boosted the company’s overall results as its core business grew 8.8 percent in turnover to close to 651 million euro. With that and other key performance indicators Accell Group is “moving in the right direction”, commented CEO Ton Anbeek as the company could only partly deliver on the targets it has set for itself with its ‘Lead global. Win local’ strategy.

First Half Year Results Point to Accell Partly Delivering on its New Strategy
Accell Group saw e-bike sales grow by 16 percent unit-wise and 47 percent in value. – Photo Bike Europe

That in March 2018 announced new strategy which is to drastically change Accell Group and its subsidiaries in the 2018-2022 period, was triggered by deteriorating results, in particular on two of its major markets; the Netherlands and North America. Rapidly growing online sales disrupted Accell’s relations with IBDs and hampered its business in these markets. In the Netherlands turnover dropped 9.4% while in North America sales declined by 14.4% in 2017. At that time it was said by CEO Ton Anbeek “We will accelerate our strategy roll out and reduce the complexity of the group in order to better and faster anticipate changes in the market. As such, we can add more value for dealers and consumers and at the same time realise our ambitions for growth and profitability.”

Financial objectives

That growth has to bring Accell to a net turnover of around € 1.5 billion by 2022. The company’s financial objectives also include: Added value of more than 31%; EBIT margin of around 8%; Working capital of less than 25% of turnover and ROCE of more than 15%. It was also said that 2018 was marked as an important transitional year and that in 2019 the first signs of Accell’s turnaround should become apparent.

That was why in particular financial analysts were with extra interest looking forward to the holding company’s first half-year results of 2019. And they were not disappointed as Accell Group grew faster than analysts at for instance ING expected.

Meeting targets

Looking at the mentioned goals of an added value of more than 31 percent; the first half of 2019 saw the company delivering on that as added value upped 27 bps to 31.2 percent. Also the EBIT target has been reached as it landed 12.6 percent higher at € 57.8m, reflecting an EBIT-margin expansion of 30 bps to 8.9%.

The other two targets (working capital of less than 25 percent and ROCE of more than 15 percent) were not realized in the first half of 2019. On working capital Accell’s financial results press release states “Trade working capital as a percentage of net turnover decreased by 200 bps to 32.2 percent.” And on ROCE “It came in at 6.7 percent. ROCE excluding IFRS 16 impact is flat versus last year with a higher profit offset by increased capital, mainly due to the higher working capital in absolute terms. ROCE excluding the North American profit dilution is approximately 11 percent. Net debt came in at € 224m versus € 177m at 30 June 2018 due to the higher working capital in absolute terms and the adoption of the new IFRS 16 leases accounting rule (+€ 30m liabilities).”

‘Moving in right direction’

Ton Anbeek, CEO Accell Group commented on the first half-year results with “Our ‘Lead global. Win local’ strategy is paying off with all key performance indicators moving in the right direction reflecting sound growth, stable volumes, margin expansion, a higher EBIT and lower working capital as percentage of net turnover for both our core business and the total group. Also cost as a percentage of net turnover has stabilized. Driven by a better availability of our key products, we have seen double digit growth in most of our core regions. In the Netherlands we’ve reversed the downward turnover and volume trend with double digit growth and strong contributions from our Koga, Sparta and Batavus brands. In the DACH region growth was hampered due to delayed Haibike and Ghost innovative new model introductions. In all our other core European regions we saw strong double digit turnover growth in e-bikes. The performance in North America did not improve and in the course of this quarter we expect to complete the strategic review of this non-core business and announce our way forward.

“Our supply chain team is on track with creating efficiencies and delivering the targeted € 12m savings for 2019. The work on complexity reduction and the introduction of our frame platform strategy are also progressing according to plan. Finally, we have started the roll out of our new IT systems which will improve our operational performance and pave the way for our digital roadmap.”

Bike sales per region

Accell Group sales in the Benelux region increased by 8.6 percent to 135.4 million euro. As explained by CEO Anbeek sales in Germany, Austria and Switzerland (DACH region) saw only minor growth by 1.4 percent to 272.6 million. The biggest growth recorded the Accell subsidiaries and distributors in various other European countries with a plus of 17.3 percent to 91.5 million. Accell’s last year acquired e-Cargo specialist Velosophy contributed 16.9 million in turnover while Accell’s P&A sales grew by 6.2 percent to 134.5 million. This resulted in a total turnover of 650.9 million euro; up 8.8 percent on the first half-year of 2018.

Accell’s nowadays called ‘non-core’ North American business decreased by 15.9 percent to € 31.8m (5% of group net turnover) with EBIT coming in at € -11.3m compared to € -8.5m in the first half of 2018. Total group net turnover grew by 7.4 percent to € 682.6m and EBIT increased by 8.9 percent to € 46.5 m Accell’s net profit was up 16.5 percent at € 29.7m.

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