Thule Group AB (THLPF) Q2 2024 Earnings Call Highlights: Record Gross Margin and Strategic ...

GuruFocus News
3 min read

In This Article:

  • Revenue: SEK3.1 billion in Q2, a 2% increase year-over-year.

  • Gross Margin: Reached an all-time high of 44.4% in Q2.

  • EBIT Margin: 23.6% in Q2, slightly up from 23.5% last year.

  • Operating Income: SEK732 million in Q2, up from SEK711 million last year.

  • Net Income: SEK559 million for Q2; SEK858 million for the first half of 2024.

  • Cash Flow from Operations: SEK819 million in the first half of 2024.

  • Net Debt: SEK1.753 billion, reduced by SEK250 million from the end of last year.

  • Inventory Reduction Target: On track to reduce inventory by SEK200 million by year-end.

  • Product Launches: Introduced new product categories including car seats and dog transportation products.

Release Date: July 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Thule Group AB (THLPF) reported a 2% FX-adjusted sales growth in Q2, with strong performance in bike-related and NuTool products.

  • The company achieved an all-time high gross margin of 44.2% in the quarter, driven by favorable product mix and lower material costs.

  • Thule Group AB (THLPF) successfully launched several new products and two new product categories, contributing to future growth potential.

  • Strong cash flow generation was reported, with a significant reduction in inventory, on track to meet the SEK200 million reduction target by year-end.

  • The company received multiple design awards, including the Red Dot Design Team of the Year, highlighting its innovation and design excellence.

Negative Points

  • The market remains challenging, particularly in North America and the RV segment, with cautious consumer behavior impacting sales.

  • Despite strong gross margins, the EBIT margin remained flat due to increased SG&A expenses related to new product launches.

  • There is a continued decline in sales to OE customers in the RV segment, although partially offset by growth in the aftermarket channel.

  • Promotional activity in the market is high, which could pressure pricing and margins, especially in non-premium segments.

  • The North American market continues to show weaker consumer sentiment compared to Europe, affecting overall sales performance.

Q & A Highlights

Q: Can you comment on the factors driving the gross margin expansion this quarter? A: The main drivers for the gross margin expansion were lower material costs and a better product mix. Absorption also improved as production levels increased. - Toby Lawton, CFO

Q: With aluminum prices up 15% versus last year, do you expect this to become a headwind in the coming quarters? A: While aluminum prices have increased slightly, the impact is less dramatic than in the past. We expect the effect to flatten out or slightly increase, but it's manageable. - Toby Lawton, CFO

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