Accell Group N.V., with well-known brands such as Haibike, Koga, Batavus and Raleigh, has published financial results for 2019. The company announced that “performance improved across the board” despite net profits plummeting from € 20.3 million in 2018 to just € 2.8 million last year; the decrease being mainly due to losses on discontinued operations. Net turnover increased by 7.5% to € 1,111 million with growth being driven by increased sales of e-bikes (+11%) and e-cargo bikes (+47%) sales.
However, according to a company news release, traditional bike sales were down 13% in value, and now represent only 16% of net turnover. Growth was held back in 2019 by delayed introductions of a number of new innovative bike models. Volumes declined due to lower sales of traditional bicycles in Turkey.
“We are well on track with our ‘Lead global. Win local’ strategy. In 2019, we booked higher top-line growth, a higher added value and a solid EBIT. Excluding one-offs, EBIT was slightly behind last year due to additional - yet planned – investments and costs made under our strategic agenda and transition roadmap. We completed the disposal of the North American business (discontinued operations) which allows us to now fully focus on executing our strategy,” stated Ton Anbeek, CEO Accell Group.
"Our supply chain team continued to create material efficiencies and delivered another € 13 million in structural savings in 2019, which come on top of the € 12 million of supply chain savings realized under our strategic plan in 2018. That said, trade working capital increased due to substantially higher inventories caused by delayed introductions of new innovative bike models and lower sales than forecasted in the second half of 2019.”
Net profit slump
According to a news release issued by Accell, the drop in net profits from 20.3 million to 2.8 million was mainly due to losses from discontinued operations. In August 2019, Accell completed the strategic review of its North American operations, which resulted in the sale and transfer of the loss-making US business including the worldwide registrations (excluding the Canadian brand registrations) of the Diamondback, Redline and IZIP brands, this meant the North American operations were substantially liquidated as per that date. Subsequently, the closely linked Beeline operations were sold and transferred to a group of investors led by the StrataFusion Group in October 2019.
The loss from discontinued operations amounted to € 56.5 million in 2019 were broken down as follows:
Operational losses of €12.1 million reflecting the operational result during the year excluding one-off cost related to the discontinuation of business.
A loss related to the outcome of the North America strategic study amounting to € 38.4 mio and consisting of:
A gain from the sale of the Canadian brand registrations to CTC with € 3.0 million reported under discontinued operations and € 11.4 million reported under continued operations (other income);
A loss on the sale of the discontinued US operations including transaction costs totalling € 31.8 million. The transaction result in continued operations was a loss of € 5.4 million (write-off of brands in operating expenses);
A reclassification of the cumulative translation reserve of -/- € 7.9 million
Closing and restructuring costs of € 7.8 million.