3.1 Group and segment results
Net turnover increased with 6.3%. This turnover growth was largely due to higher sales of (sports) e-bikes and advanced sports bicycles, while demand for regular (non-e) bikes and simple sports bikes declined. Corrected for the sale of the parts & accessories activities in North America in the first half of the year, growth came in at 7.4% in 2016.
The added value (net turnover less material costs and inbound transport costs) came in at 30.0%. The absolute value was 0.6% higher at € 314.8 million. The changed sales mix and a different geographical distribution of turnover had an impact on the added value. The added value was also negatively impacted by higher dealer discounts and the fact that we did not fully charge on higher materials prices (due among other things to unfavourable currency exchange rates) to customers.
The decline in the number of bicycles sold and the effects of reorganisations resulted in a drop in staff costs. Staff costs as a percentage of turnover declined to 11.6%, from 12.5%. The operating costs also dropped; as a percentage of turnover, other operating costs fell to 11.7%, from 12.5%. The decline in other operating costs was partly due to a lower sales volume and was realised despite higher marketing and consultancy costs. The higher consultancy costs were largely related to organisational changes in the supply chain and external support for the refinement of the group strategy. In 2016, Accell Group invested in a more integrated management approach. As part of that drive, Accell Group strengthened the competencies at group level in areas such as Supply Chain, Marketing, HR and Finance.
The increase in turnover and (relative) decline in costs led to an increase in operating result (excluding one-off charges) of 5% to € 65.9 million. One-off charges in 2016 related to North America and resulted from the bankruptcies of two major sports chain and the effects of the sale of our parts & accessories activities, including the associated reorganisation and the buy-out of pension obligations. The combined one-off charges came in at € 5.5 million in 2016 (2015: € 4.0 million, as a result of the Taiwan incident).
Financial expenses came in on balance at € 8.3 million, a decline of 9%. The lower expenses were due to smaller exchange rate differences on positions in foreign currencies, a lower credit uptake in the second half of the year and slightly lower interest rates. Taxes came in 26% higher at € 20.4 million, due to a strong improvement of the results in Germany and the non-capitalisation of carry-forward losses in North America. As a result, the average tax rate increased to 38.7%, from 33.5%. Net profit came in at € 32.3 million in 2016, the same as in 2015.
Performance per segment
Net turnover in the bicycle segment came in 9.3% higher on the back of increased e-bike sales. Sales and turnover of sports e-MTBs of our brands Haibike, Ghost and Lapierre recorded particularly strong growth. Turnover in e-bikes was up 33%, while turnover in regular bicycles declined by 11%. Growing numbers of consumers are choosing an e-bike to replace non-electric bikes. The turnover contribution from e-bikes increased to 55% in 2016, from 45% in 2015. The average price per bicycle increased by 23% to € 536, from € 437 in 2015, on the back of the changing product mix. Due to the strong focus on sales of more expensive and high-quality bicycles, the total number of bicycles sold declined with 11% to 1,457,000 in 2016, from 1,642,000 in 2015.
The changed sales mix and a change in the geographical distribution, as well as more cut-price sales and the one-off charges in North America all had a negative impact on the segment result.
Parts & accessories
Net turnover in parts & accessories declined by around 2% in 2016, due entirely to the sale of the bicycle parts and accessories activities in North America. Corrected for this sale, turnover was higher, in 2016, with an increased proportion of turnover from Accell’s own XLC brand in Europe compared to 2015.
The segment result of these trading activities increased by 12% to €17.5 million on the back of good results in all European countries where we are active. The greater contribution from our own XLC brand (in Europe) to overall turnover also had a positive impact on the higher segment result, thanks to the more effective utilisation of procurement benefits.
Developments per region
Turnover in the Netherlands was slightly higher. Turnover in e-bikes, with the brands Koga, Batavus and Sparta, was up 5%. Turnover in parts and accessories was up 14% on the back of higher (replacement) demand for parts for e-bikes, such as batteries, displays and chargers. The demand for regular bicycles declined both in terms of numbers and in turnover. At this point, more than 90 e-bike brands are being marketed in the Netherlands via various channels. In the autumn of last year, we opened De Fietser (The Cyclist), the largest bicycle experience centre in Europe, in the Dutch town of Ede. The centre provides consumers with the opportunity to see and test all our bicycle brands and models. The centre also regularly organises activities to showcase the various uses of bicycles and enhance the bicycle experience.
In Germany, turnover was up 17% largely due to increased sales of Haibike’s e-MTBs and Ghost’s regular e-bikes. Turnover in parts was slightly higher than in 2015.
The North American market was stable, around 15% of bikes are now sold online. Adjusted for the sale of the activities in the field of parts & accessories, Accell turnover in North America came in 6% lower than in 2015. Turnover in sports bikes and e-bikes was higher, but this increase was not enough to fully compensate for the loss of two major sports chains as a result of bankruptcies. E-bikes are gaining in popularity in this market, too, and Accell Group is in a solid position for continued growth with its brands Haibike, Raleigh Electric, and IZIP. In the year under review, we initiated the implementation of omni-channel sales in the North American market. All brands are now available via specialist retailers and online.
In the rest of Europe, higher sales of e-MTBs was the main the driver of a 10% rise in turnover, compared with 2015. The popularity of the e-MTBs of our international brands Haibike, Lapierre and Ghost is growing in almost all European countries. Turnover in parts and accessories also increased in virtually all other countries in Europe.
Turnover in other countries outside Europe was limited and increased by around 15%, largely due to continued growth in Turkey. Turnover in other Asian countries and in Australia was roughly the same as in 2015.
New distribution centre for bicycle parts and accessories
In the spring of 2016, we opened our new distribution centre in Apeldoorn for the parts and accessories product range. The distribution centre has an intelligent storage and order picking system with a capacity of a maximum of 12,000 order lines per day. Accell Group is the first company in the bicycle industry to use such an advanced system.
In the automated order picking process, remote-controlled robots move across a metal grid. They collect the items in the order and deliver them to the order picker who prepares them for shipping. The system can operate 24 hours a day, 7 days a week, which is helping us to reduce delivery times. And it is also possible to combine shipments to reduce transport costs. The efficient system allows us to maintain smaller inventories, freeing up time so we can devote more attention to logistics services.