Electric bikes drive Accell’s expansion

Electric bikes again fueled sales growth last year at Accell Group, the Dutch bicycle company with brands from Batavus to Sparta, Raleigh and many more. Favorable weather conditions supported the group's performance, which was driven by its Dutch and German brands.

Accell lifted its sales by 4 percent to €882.4 million, with an organic growth of 8 percent. Its operating profit excluding one-off items came in at €44.3 million and its net profit jumped by 37 percent to €26.1 million.

Accell predicts that its turnover and profits will continue to rise this year. Building on its robust market shares in middle to high-end bikes, the company wants to expand further in electric bikes and top-end sports bikes. Another focus is the development of the group's parts and accessories business, in order to set up a fully-fledged European service network. The acquisition of Comet in Spain and Cycle Service Nordic (CSN) in Denmark earlier this year fits in that strategy.

The group's sales were buoyant in the Netherlands and they made ample gains in Germany last year. The group said that nearly all markets were stable or improved slightly. However, its underlying sales slipped in North America and they dwindled in other countries outside Europe.

Accell's sales of bicycles inflated by 5 percent to €658.1 million for the year, with an increase of 10 percent for continuing operations. While the number of bicycles sold declined by nearly 6 percent to 1,725,000, their average price increased again to €377, up from €336 last year, due to the growing share of electric bikes. Operating profit for this category inflated by 16 percent to €46.0 million.

Sales of electric bicycles climbed by 23 percent and came to account for 41 percent of Accell's turnover in bicycles last year. This made up for a decline of 6 percent in sales of sports bikes, as the Accell group quit delivering to the mass market in the United States.

The Accell group's turnover in bicycles improved by 12 percent in the Dutch market, where the number of units sold increased by 6 percent, against an estimated rise of 7 percent for the market. The rise in Dutch turnover for the Accell group chiefly came from a sales increase of 14 percent in electric bikes. The group's Dutch brands, Batavus, Sparta and Koga, thus raised their market share.

Another interesting factor in the Dutch market is that sales have been stimulated in the last quarter by government regulations that came into effect at the start of this year. The government changed tax benefits on bicycles purchased for commuting, so that such bicycles fall under the general expense allowance scheme. So many Dutch consumers hurried to buy a bicycle under the previous scheme before the end of the year.

The group's reported turnover for bicycles declined in Germany due to the sale of Hercules but sales of continuing operations climbed by 12 percent. This includes an increase of 5 percent in volume, compared with an estimated rise of 4 percent for the entire German market in volume.

When it comes to other European countries, Accell's bicycle sales were up by 11 percent, with increases in France, Austria, Switzerland, Spain, the Scandinavian countries and the United Kingdom, where Raleigh was the strongest factor behind a 10 percent sales rise. On the other hand, the group's bicycle turnover declined in Belgium due to sagging sales at Brasseur, which is focusing on parts and accessories.

Bicycle sales in North America advanced by 4 percent, with an increase in sales through sports retailers but a decline in specialist bicycle stores. The underlying drop of 9 percent in the entire group's North American sales came with a fall of 40 percent in regional sales of parts and accessories. This was blamed on a slight decline in the market as well as delivery issues due to the integration of SBS and Raleigh into Accell North America.

Meanwhile, Accell's sales of parts and accessories moved up by 5 percent to €211 million, with an underlying increase of 3 percent. Sales in this category jumped by 28 percent in the Netherlands and by 1 percent in Germany, all of that through organic growth. The company invested in an automated distribution center for parts and accessories, which is moving from Veenendaal to Apeldoorn after the relocation of the Sparta production activities to Heerenveen. Sales of parts and accessories in other European countries inflated by 11 percent.

The group's own brands of parts and accessories, chiefly XLC, lifted their sales by 17 percent, as the company continues to invest in the after-market and accessories. Operating profit for this division amplified by 11 percent to €11.3 million.

As previously reported, the Accell fitness division was divested in August. The sale resulted in a one-off charge of about €1.0 million as the company had to buy out several operational commitments. Other one-off items were a book profit of €2.3 million on the disposal of Hercules, extra expenses of €1.6 million for reorganization and acquisition costs for Comet at €0.3 million.

After a spate of acquisitions in previous years, the group's focus in 2014 was on integration and synergies derived from scale. This led to reorganizations in the Netherlands and North America, which will both be finalized this year. Accell completed the closure of its production facility in Canada last year but the sell-off of old inventory in the warehouse proved more costly than predicted.