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Accell: Sales in North America, e-bikes bump up revenue

Published February 21, 2014
Dutch company seeks to build scale with new acquisitions in 2014.

HEERENVEEN, the Netherlands (BRAIN) — E-bikes and sales in the North American market boosted full-year revenue for Accell Group N.V. The Dutch holding company, which owns Seattle Bike Supply, Raleigh, Diamondback, Currie Technologies and an array of European bike brands, posted a 10 percent increase in 2013 revenue, which totaled $1.1 billion (849 million euros).

Net profit came in at $26.1 million (19 million euros), down from $32 million (23.3 million euros) due to one-off reorganization costs in the Netherlands and North America as well as higher financing charges and higher tax charges, Accell noted in a lengthy press release.

Accell completed the consolidation of SBS and Raleigh warehouses and offices and merged IT operations in the U.S. in January. It also merged bike production for its European brands Batavus and Sparta at the company's headquarters in Heerenveen.

Also, the company has completed the closure of its Canadian production facility. From 2014 on, its Canadian office will focus sales of Raleigh bikes through IBDs.

North America accounted for $177 million (129 million euros) in revenue, up 16 percent compared to the prior year. The Netherlands accounted for $288.5 million (210 million euros), up 2 percent; Germany $277 million (202 million euros) up 6 percent; the rest of Europe was $370.9 million (270 million euros), up 16 percent; and other countries brought in $52 million (38 million), up 19 percent.

Across all of its markets, Accell Group N.V. sold 1.8 million bikes in 2013, up from 1.6 million in 2012, but the average price dipped slightly to $461 (336 euros) from $473 (345 euros). The company pointed to high discounts on bikes in the second half of the year and sales of more mid-market mountain and road bikes under its Raleigh brand for the drop.

Sales of e-bikes grew 23 percent and made up 35 percent of Accell's total bike sales last year.

In North America, Accell said sales increased substantially, particularly in the multisport channel. Sales of e-bikes were also up, though the company acknowledged that it remains a relatively small market. But disappointing bike sales in the first half of the year led to high inventories and deep discounts at the end of the season and parts and accessories sales declined as well. Overall, the results of its American brands came in lower than expected.

"The year 2013 was a challenging one for Accell Group as we faced lower consumer spending and unfavorable cold weather in the spring," said René Takens, CEO of Accell Group, in an earnings announcement. "Partly due to the continuing popularity of e-bikes, turnover was higher in virtually all markets where Accell Group is active. Most markets were stable or showed a slight decline. Our operating result increased, but net margin was down due to the previously announced higher discounts granted in the second half of the year. These discounts were required to normalize the relatively large inventories at the end of the bicycle season, which were the result of unfavorable weather in the spring."

Accell said that, overall, inventory levels have normalized despite a difficult season.

The company made adjustments to production to further lower inventories of components and new bike models.

Looking ahead at 2014, Accell expects to increase revenue and profit based on "underlying positive trends combined with macro-economic indicators." Accell also noted that it's actively seeking to buy other bike brands.

"The company will be looking for further increases in scale to generate additional benefits in purchasing, production, development and marketing... Any acquisitions will have to be complementary and add value to the group in the short term," Accell Group said.

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