The implementation of the Accell Group's new strategy is starting to bear fruits. The Dutch company behind Haibike, Lapierre, Batavus, Raleigh and many other bicycle brands said that its turnover accelerated in the second half of 2018 in its core markets except in North America, where the group recorded a disastrous performance. At the end of 2018, Accell decided to run its North American operations as a separate business and review the strategic options for eliminating the losses in the region.

After a difficult 2017, Accell's management described 2018 as a year of transition in which it focused on reorganizing the group. It has adopted a more focused use of its three large manufacturing facilities in Europe: low-cost production in Turkey, e-bikes in Hungary and a flexible facility for the efficient production of smaller runs in the Netherlands.

It has also appointed a mix of younger managers and more seasoned staff to create different dynamics, including the appointment of Ruben Baldew – who has spent the last 17 years at Unilever – as chief financial officer.

From August 2018 onwards, all regional and central teams have been rolling out Accell's new omni-channel distribution strategy. The centralized management of the group's omni-channel, e-commerce and supply chain operations is structured in consultation with the regional management teams, which can now choose from the full range of the group's brands and models. In addition, Accell has started centralizing the management of the parts and accessories operation, to take greater advantage of synergies in procurement, sales and IT.

The management said the complexity of its assortment has been reduced by approximately 30 percent in most regions. A number of smaller and less efficient locations and entities have been divested.

At the same, the company acquired a mobile bike service, Beeline. It also purchased the brand Babboe, which produces e-cargo bikes, designed to include an open or closed box to carry children. The brand showed strong growth in 2018, according to the management.

Focusing on e-bikes, Accell launched the Haibike Flyon in 2018, claiming that it sets the standard for a next generation of e-mountain bikes, along with the Lapierre e-Road bike Xelius, which has opened up the e-road bike market segment for the company. Both product initiatives are expected to make a major contribution in 2019. The same goes for the Koga Pace model introduced in November 2018 and the Sparta M8B, which won the “E-bike of the Year 2019” award in the Netherlands.

Overall, in spite of cost savings of €12 million, the group's operating profit was down by 3.0 percent in 2018 to €33.0 million, largely due to a loss of €21.0 million in North America. However, Accell's net earnings jumped by 93.3 percent to €20.3 million.

The group's revenues grew by 2.4 percent from the previous year to €1,094.3 million, on the back of the positive development in electric bike sales in the German-speaking, Southern European and Scandinavian countries. The bicycle parts and accessories business and the acquisition of Velosophy also contributed to the higher turnover.

Bike sales in the German-speaking countries increased by 12 percent to €421.2 million. However, the company had lower bicycle sales in the Benelux and North America. In North America, sales fell by 36 percent to €61.0 million, largely due to a drop in sales under the Diamondback and Raleigh brands, partly linked to the loss of a large client in the multi-sports channel in the previous year. In the Benelux countries, the decline of 5 percent to €205.4 mllion was primarily due to a decision to let go of a large internet client.

The share of e-bikes in the company's overall bicycle turnover increased to 71 percent in 2018 from 63 percent a year earlier. The volume of bicycles sold declined by 1.9 percent in Europe and by 55 percent in North America, which resulted in an overall drop of 15 percent in units.

Revenues from the sale of bicycles were up by 1.7 percent to €845 million overall. The turnover in the core business increased by 6.5 percent, but volumes were off by 1.9 percent due to less focus on traditional bikes with lower margins. The e-MTBs of Haibike, Ghost and Lapierre were once again responsible for the bulk of the growth. The demand for electric sports bikes continues to show strong growth in Europe, while the demand for regular bikes is under pressure in most countries, in terms of both volume and value.

Revenues from parts & accessories gained 4.9 percent to €249 million, with a 10.3 percent increase in the second half of the year, driven by more integrated and centralized management and the growth of the XLC brand.

By region, bike sales in North America dropped by 36 percent, partly due also to discounted sales of old inventories. The non-core North American business ended with an operating loss of €21 million. This led Accell to announce a strategic review with regard to its North American business, and conclusions on the future of the business are expected in the third quarter of 2019 at the latest.

In Germany, the group's turnover continued to grow, mainly on the back of strong demand for e-bikes. The Haibike, Ghost and Winora brands performed well. Sales of bicycle parts and accessories also increased in Germany.

In the U.K., the company's greater focus on premium bikes and e-bikes resulted in stable revenues. In Scandinavia, the growth was led by e-bikes and bicycle parts and accessories. The market in Sweden benefited from government subsidies on bicycle purchases.

In Southern Europe, the bicycle turnover increased, primarily because of strong demand for Lapierre's electric sports bikes in the second half of the year.

Moving forward, the management expects continued growth in 2019 in its core business, driven by a strong consumer interest in e-bikes and cargo bikes and strong innovations such as the Sparta M8B.