H1 2020 results
Ton Anbeek - CEO
Ruben Baldew - CFO
24 July 2020
Disclaimer
- This presentation may contain forward-looking statements. These are based on our current plans, expectations and projections about future events.
- Any forward-looking statement is subject to risks, uncertainties and assumptions and speak only as of the date they are made. Our results could differ materially from those anticipated in any forward-looking statement.
- The financial statements and other reported data in this presentation have not been audited.
2
Ton Anbeek - CEO
3
Strategic objectives and financial targets
Strategic objectives | 2022 financial targets | ||||||||
• Increasing dealer and consumer satisfaction | • | Turnover | € 1.4 - € 1.5 bn | ||||||
• | Increasing market share | • Added value / Turnover | 31% | ||||||
• | Increasing net profit | • | EBIT / Turnover | 8.0% | |||||
• Strong and healthy balance sheet | • Trade working capital / Turnover | < 25% | |||||||
• | Corporate Social Responsibility | • Return on capital employed | > 15% | ||||||
4
H1 highlights
- Steep post lockdown sales rebound in May and June bringing YTD net sales to +4%
- Intensified focus on cash delivery; strict governance on expenses and working capital reduction in response to COVID-19 outbreak
- Added value down 359 bps due to negative mix, discounts during lockdown and higher supply chain costs mainly due to disruptions caused by COVID-19
- Opex down € 6 mio. Excluding one-offs down € 8 mio driven by cost savings
- Working capital improved 243 bps to 29.7% of net sales versus end-June 2019 due to substantially reduced inventory levels
- Strong cash generation resulting in a positive cash flow of € 129 mio and a net debt / rolling EBITDA of 2.0
- Additional headroom secured to deal with uncertainty and depth of COVID-19
- Strategy progressing further with improved innovation, strong P&A expansion and optimized omnichannel plans
5
H1 key financial performance indicators
Net sales | Added value % | EBIT / | TWC YoY / |
growth | vs PY | EBIT excl. one-offs | Avg TWC |
+4.0% | € 45 mio | -243 bps |
-359 bps | ||
€ 48 mio | +368 bps |
6
Recap of strategy
Winning at the point of | Consumer centric | |||||||||
Lead Global. Win Local | ||||||||||
purchase | omnichannel | |||||||||
Centralised & integrated | ||||||
Innovation | ||||||
P&A business | ||||||
Fit to compete
7
H1 strategic progress
Lead Global
Velosophy expanding further across Europe
Brand teams in place, coordinated by country leads
Innovation centrally led with sign-off in local brand innovation team
Point of purchase
Strong growth in the Netherlands. Availability on top runners hampering further uplift
Strong recovery in Germany after lockdown; German stock has been shared with UK and Nordics during lockdown
Nordics, UK, Southern Europe strong consumer demand and penetration growth of e-bikes
Omnichannel
Focus on brand websites:
- Strong availability through search
- Click and collect functionality
- Go live Raleigh.co.uk
- D2C growth Raleigh UK of 460%
Optimizing dealer stock and order management through CRM and order entry tools
Innovation
Continued award winning bikes in the Netherlands (eg. Batavus Finez bike of the Year)
Premium e-cargo bike Carqon launched and well received with strong demand so far
Haibike Flyon production up and running
P&A
Additional brands added to portfolio
Continued excellent growth of online sales (third parties)
29% growth XLC business in H1
Fit to Compete
Cash delivery and product availability main focus points in 2020
Higher costs per bike due to COVID-19 disruptions
Complexity (# SKUs) further reduced and good progress booked with standardization (frame platforms)
8
Well on track with ample room for further improvement
On track
Continued strong underlying demand for our products and brands as seen in May and June recovery
Working capital reduction
Overall cash delivery with additional headroom secured
Fixed costs increase halted
Urban mobility growth continued, with launch Carqon P&A growth
Improvement needed
Supply chain disruptions hampering availability and costs
Lower added value due to negative mix, discounts and higher supply chain costs
Average working capital and inventory levels
9
Ruben Baldew - CFO
10
Net sales and profit
Net sales | Profit | |||
% Growth | % Added value | EBIT | EBIT | ||||
Y-o-Y | excl. one-offs | ||||||
H1 | +4.0% | H1 | -359 bps | € 45 mio | € 48 mio | ||
H1 PY +8.8% | H1 PY +35 bps | € 56 mio | € 56 mio |
11
Performance per region
Central | Benelux | ||
-10,3% | +5,0% | ||
250 | 122 | 128 | |
225 | |||
2019 | 2019 | ||
2020 | 2020 | ||
H1 | H1 |
• March & April lockdowns affected sales H1 | • | COVID-19 impact was only limited as | |
• | Strong recovery after lockdown | shops remained open | |
• | Stock of German brands have been sold in | • | Growth driven by Batavus thanks to strong |
Nordics and UK during lockdown | portfolio and activation |
- Flyon fully in production and rolled out
- Order book MY 2021 looks promising
Dach renamed into Central as Eastern European countries are also included
Other | |
+5,5% | |
135 | 143 |
2019 | |
2020 | |
H1 |
- Growth in Nordics and UK very strong driven across brands thanks to growth bike market
- France sales slightly down due to lockdown from March into 2nd week of May
Net sales numbers in € mio, based on geographical location of customer. P&A and Velosophy excluded. | 12 |
Performance Velosophy and Parts & Accessories
Velosophy | |
22.3% | |
21 | |
17 | 2019 |
2020 | |
H1 |
- Cargo bike sales continued strongly also thanks to D2C model in various countries
- Growth held back by lockdowns in France & Germany
- Next generation e-cargo bike Carqon successfully launched in June
P&A | |
+27.3% | |
161 | |
127 | 2019 |
2020 | |
H1 |
- Excellent growth of P&A driven by:
- Indoor trainer sales during lockdown
- Strong growth from repair shops
- Additional business through (new) online customers
- XLC brand grows 29%
Net sales numbers in € mio
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Growth track continues
Net sales H1 2013 - H1 2020 | Comments | |||||||
+4.0% | • Average growth over last 7 years 6.8% | |||||||
677 | ||||||||
+6.8% | 651 | • 2020 growth below 7-year average | ||||||
598 | ||||||||
580 | due to sales impact of lockdowns, | |||||||
559 | ||||||||
particularly in Germany and France | ||||||||
495 | ||||||||
428 | 443 | |||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
2013-2017 core (Accell Group excl. North America); 2018 - 2020 continuing operations |
14
Change in mix due to strong growth P&A and stable e-bikes
Categories as % of net sales | % Growth H1 vs PY | Comments | ||||
598 | 651 | 677 | • Traditional bikes down 9% in line with | |||
Cargo | 0% | 3% | 3% | |||
historical average | ||||||
20% | ||||||
Parts | 19% | |||||
24% | Cargo | 22% | ||||
Traditional | 20% | 16% | • Cargo bikes now at +3% of business; | |||
14% | majority of cargo bikes are e-bikes | |||||
Parts | 27% | |||||
• Parts up 27% growth due to online and | ||||||
Traditional | -9% | repair shops | ||||
E-bikes | 61% | 62% | 60% | |||
• E-bikes continue to grow in every | ||||||
-1% | country except Germany due to | |||||
E-bikes | lockdown | |||||
2018 H1 | 2019 H1 | 2020 H1 |
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Added value down to 27.6%
Added value % H1 2013 - H1 2020 | ||||||||
Actuals | ||||||||
33% | 32.5% | 32.4% | ||||||
32% | 31.5% | 31.4% | 31.2% | |||||
30.8% | ||||||||
31% | ||||||||
30% | 29.5% | |||||||
29% | ||||||||
28% | 27.6% | |||||||
27% | ||||||||
26% | ||||||||
1% | ||||||||
0% | 2013 H1 | 2014 H1 | 2015 H1 | 2016 H1 | 2017 H1 | 2018 H1 | 2019 H1 | 2020 H1 |
2013-2017 core (Accell Group excl. North America); 2018 - 2020 June continuing operations.
2018 Added value is restated by excl. the IC deliveries towards North American operations, 30.8% vs 30.9% in H1 2019 presentation.
Comments
- COVID-19breaks added value trend
- Margin down 359 bps due to:
- Mix effects
- Discounts
- Higher supply chain costs as a result of COVID-19 combined with adverse forex
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Opex reduced by € 5.5 mio | ||||||||
Opex H1 2019 - H1 2020 | Comments | |||||||
• | Opex reduced by € 5.5 mio from € 147.3 to € 141.8 mio. | |||||||
As % of net sales, Opex decreased 170 bps | ||||||||
2 | • | Excluding one-offs Opex decreased € 7.9 mio (195 bps) | ||||||
147 | -5 | |||||||
with main movements | ||||||||
2 | 2 | |||||||
145 | ||||||||
• One-offs € 2.4 mio: | ||||||||
-5 | ||||||||
1) € 3.0 mio charge due to impairment (IT | ||||||||
142 | related) plus some restructuring effects | |||||||
2) € 0.6 mio benefit government support mainly | ||||||||
in Germany, France and Turkey | ||||||||
• Variable costs down € 2.6 mio: | ||||||||
1) Lower spend of € 4.8 mio in production as | ||||||||
reduced need for flexible labor due to | ||||||||
lockdowns | ||||||||
2) Distribution increase of € 2.2 mio attributable | ||||||||
in full to P&A volume growth with underlying | ||||||||
improved average dropsize | ||||||||
2019 Core | Allocated | 2019 Discontinued | One-off 20 | Production | Distribution | Other savings | 2020A | |
Charges US | • Other cost reduction of € 5.3 mio in marketing and | |||||||
22.3% of net | 22.6% of net | 20.9% of net | ||||||
overheads as part of the COVID-19 measures | ||||||||
sales | sales | sales |
17
EBIT-margin down at 6.7% due to lower added value
EBIT% H1 2013 - H1 2020
Strat Target
12% | Actuals/Plan | |||||||||||||||||||||
10,4% | 10,4% | |||||||||||||||||||||
10% | 8,3% | 8,9% | 8,9% | 8,6% | ||||||||||||||||||
8% | 8,1% | |||||||||||||||||||||
6,7% | 7,0% | |||||||||||||||||||||
6% | ||||||||||||||||||||||
4% | ||||||||||||||||||||||
2% | ||||||||||||||||||||||
0% | ||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 excl. | |||||||||||||||
2013 |
One-offs
Comments
- EBIT down € 10.6 mio and 189 bps versus H1 2019
- Decrease driven by:
- Lower added value -359 bps
- Partly compensated by lower Opex as percentage of net sales (-170 bps)
- EBIT excluding one-offs at 7.0%
2013-2017 core (Accell Group excl. North America); 2018, 2019 and 2020 continuing operations
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Net profit declines to € 28.6 mio due to added value shortfall
Profit & Loss H1 2020 - H1 2019 | |||||
EBIT excl. one-offs H1 2020 - H1 2019 | |||||
Comments
• | Growth 4% versus 8.8% last year while added value | ||
decreased 359 bps | |||
• | Opex reduced by | 5.5 mio leading to EBIT excluding | |
one-offs at € 48 | mio | ||
€ |
• Interest costs up due to higher borrowings
• Income tax down due to lower profit
• Previous year discontinued were operating losses of the divested non core North American operation
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Trade working capital improved due to inventory reductions
June - Periodic | June - Average | |||||||
+0.3% | +2.6% | |||||||
+3.7% | ||||||||
-2.4% | 33,1% | |||||||
34,2% | 30,5% | 31,5% | ||||||
32,2% | 29,4% | |||||||
29,4% | 29,7% | |||||||
Inventory | 33.0% | |||||||
27,6% | 29,2% | 30,7% | 27,9% | Debtors | 28.8% | 30.4% | 29.4% | |
Creditors | ||||||||
TWC% | ||||||||
16,7% | 17,7% | 17,1% | 17,3% | 15.0% | 14.9% | 14.7% | 15.1% | |
-14,9% | -12,6% | -15,6% | -15,5% | (13.3%) | (13.9%) | (14.7%) | (15.0%) | |
2017 | 2018 | 2019 | 2020 | 2017 | 2018 | 2019 | 2020 | |
2013-2018 core (Accell Group excl. North America); 2019 -2020 continued operations | 2013-2018 core (Accell Group excl. North America); 2019 -2020 continued operations | |||||||
Comments |
June Periodic
- Working capital at end of June down 243 bps at 29.7% of net sales, driven by lower inventory (-272 bps)
- Reduction driven by strong May and June sales
- Focus in H2 2020 and Q1 2021 is to ensure right availability whilst continuing strong governance on working capital
June Average
- Average at +368 bps driven by inventory +360 bps
- High inventory position in Q4 2019
- Inventory increased further till May due to:
- Normal season build up Jan/Feb into March
- Lockdowns hampering sales March and April
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TWC regular seasonal patterns. Cash conversion from Q2 to Q3
Rec Inv
Lia
Trade working capital avg 2018-2019(% on net sales)
Production peak | Delivery peak | Orders new year | Inventory new | |||||||
season | ||||||||||
Cash out | Cash in | Cash in | Cash out | |||||||
36.1% | ||||||||||
33.1% | 29.5% | |||||||||
19.6% | ||||||||||
28.2% | ||||||||||
17.4% | 12.2% | |||||||||
12.2% | ||||||||||
34.6% | 30.0% | 29.0% | 33.0% |
-12.9% | |||
-18.1% | -14.2% | -15.7% | |
Q1 | Q2 | Q3 | Q4 |
21
TWC patterns distorted due to lock down. Reductions as of May
Trade working capital avg 2018-2019(% on net sales) | Trade working capital H1 2020(% on net sales) | ||||||||||||||
Production peak | Delivery peak | Orders new year | Inventory new | Production peak | Delivery peak | ||||||||||
season | |||||||||||||||
Cash out | Cash in | ||||||||||||||
Cash out | Cash in | Cash in | Cash out | ||||||||||||
38.6% | |||||||||||||||
36.1% | |||||||||||||||
33.1% | 18.6% | 29.7% | |||||||||||||
29.5% | |||||||||||||||
19.6% | |||||||||||||||
28.2% | |||||||||||||||
17.4% | 12.2% | 17.3% | |||||||||||||
12.2% | |||||||||||||||
40.9% | |||||||||||||||
34.6% | 30.0% | 29.0% | 33.0% | 27.9% |
-12.9% | |||||
-18.1% | -14.2% | -15.7% | -20.8% | -15.5% | |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 |
Rec Inv
Lia
22
Strong cash generation due to focus on cash, costs and TWC
Cash flow H1 2020
297 | ||||||||
129 | 122 | 181 | ||||||
-8 | 116 | |||||||
-6 | ||||||||
70 | ||||||||
59 | ||||||||
Cash from | Cash from | Cash flows from | Interest | Cash from | Cash from | Free cash flow | Cash from | Net Cash |
profits | working capital | operations | & Taxes | operating | investing | financing | Increase | |
activities | activities | activities |
Cash flow H1 2019 | ||||||||
58 | ||||||||
-69 | ||||||||
1 | ||||||||
-11 | -10 | 29 | ||||||
-21 | -7 | |||||||
-28 | ||||||||
Cash from | Cash from | Cash flows from | Interest | Cash from | Cash from | Free cash flow | Cash from | Net Cash |
profits | working capital | operations | & Taxes | operating | investing | financing | Increase | |
activities | activities | activities |
Comments
Operating cash flow € 129.1 mio driven by:
- Profit corrected for depreciation, amortization, finance costs and tax
- 58.8 mio
- Change in working capital € 66.9 mio
- Provision, employee benefit and deferred revenue € 3.4 mio
Increase cash at bank € 297.3 mio driven by
- Free cash flow € +115.9 mio
- Financing activities € +181.5 mio
- Accordion € +50 mio
- GO-Cfinancing € +60 mio
- Facility A € +70 mio
- Other € +1.5 mio
23
Additional headroom secured and adjusted covenants
Financing
Financing Q1:
- Term loan € 125 mio (incl. € 50 mio drawn in March under the Accordion)
- Revolving Facility A € 175 mio
- Revolving Facility B € 100 mio seasonal facility running from 1 December to 15 July
Additional financing Q2:
-
GO-Cbank loan € 115 mio until 30 June 2022. Government backed loan (80%)
-> Drawings: € 60 mio H2 2020 and € 55 mio in Q1 2021 (if needed) - France government bank backed (90%) loan of € 5 mio
Other conditions during GO-C and before back to original covenants:
- No dividend distribution
- Limitations on disposals and acquisitions; approval needed above certain thresholds
- Margin increase of 30 bps (10 bps permanently on seasonal facility)
Covenants 2020
1. Term loan leverage: N/A | ||
Relevant Period ending | Outstandings/EBITDA | |
30-Sep-21 | 4.64:1 | |
31-Dec-21 | 3.11:1 | |
Each Relevant Period thereafter | 2.50:1 |
2. Solvency ratio: | Relevant Period ending | Solvency Ratio |
Q2 2020 = 23.4% | 30-Jun-20 | 15.0% |
31-Dec-20 | 15.0% | |
(cash and borrowings | ||
30-Jun-21 | 16.2% | |
netted = 32.3%) | ||
31-Dec-21 | 18.6% | |
Each Relevant Period thereafter | 25.0% | |
3. LTM Normalized EBITDA: | ||
Relevant Period ending | LTM EBITDA (EUR) | |
Q2 2020 = € 58.1 mio | 30-Jun-20 | -30,000,000 |
31-Sep-20 | -58,900,000 | |
31-Dec-20 | -70,600,000 | |
31-Mar-21 | -51,400,000 | |
30-Jun-21 | 5,600,000 |
4. Minimum liquidity: € 416 mio (not less than € 25 mio)
5. Borrowing reference: headroom € 255 mio (remains unchanged)
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Strong € 70.6 mio reduction of net debt
Total group return on capital and net debt H1 2020 | ||||
ROCE | Net debt | Net debt / rolling | ||
EBITDA |
9.1% | € 154 mio | 2.0 |
9.0% | € 123 mio | 1.9 |
Excl. IFRS 16 & one-offs | Excl. IFRS 16 | Excl. IFRS 16 & one-offs |
H1 2019: 10.2% | H1 2019 € 224 mio | H1 2019: 3.1 |
Excl. IFRS 16, one-offs 10.9% | Excl. IFRS 16 € 195 mio | Excl. IFRS 16 & one-offs 2.8 |
Comments
- ROCE at 9.1%; decreased versus previous year due to lower EBIT
- Net debt reduced by € 70.6 mio versus end- June 2019 and € 112 mio vs year-end 2019. Main driver reduced working capital
- Net debt / rolling EBITDA at 2.0 (1.9 excl. one-offs and IFRS 16). Decrease due to cash management and working capital reduction
25
Balance sheet
Assets | Equity & Liabilities | |||||
- Decrease in TWC versus December 19 and June 19
- Higher overall balance sheet driven by higher cash and borrowings. Will be optimized in H2
26
Financial summary
Main conclusions H1 2020
- Net sales growth 4.0%
- Added value % decreasing due to higher supply chain costs, negative mix and prioritising cash over margin %
- Opex decreased underlying by € 8 mio driven by reduction of costs in factories and overheads
- EBIT at € 45 mio, excluding one-offs € 48 mio
- Working Capital reduction 243 bps driven by inventory decrease, average working capital still up due to higher Q4 inventory and high inventory during lockdown
- Positive cash flow of € 129 mio. Net debt/rolling EBITDA at 2.0
- Additional headroom secured to deal with uncertainty and depth of COVID-19
27
Ton Anbeek - CEO
28
2020 Priorities
- Health and safety employees
- Deliver positive cash flow
- Strict expenses control
- Strict working capital management
- Drive product availability as much as possible both for H2 2020 as well as for H1 2021
- Continue improving demand planning/forecasting
- Continue improvements in time in full innovation delivery
- Continue complexity reduction (business/assortment/platform/components)
- Drive cargo/urban mobility solutions
29
2020 Outlook
- Market momentum driven by electrification trend, investments in infrastructure and tax benefits. Recent events have further propelled this
- However supply chain disruption as a result of COVID-19 has led and will continue to lead to lower availability and higher costs. We therefore expect EBIT in 2020 to be lower than in 2019
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Disclaimer
Accell Groep NV published this content on 24 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 July 2020 13:05:16 UTC