A strong first quarter
Events in the world were overwhelming in the first quarter of 2022. Russia’s invasion of Ukraine, continued challenges in global supply chains and substantial cost increases have affected each and every one of us. Considering this situation I am very pleased that we continue to increase sales with unchanged high profitability.
First-quarter sales growth was 20 percent (13 percent after currency adjustment) compared with the extremely strong first quarter in the previous year.
We managed to offset the effects of more expensive raw materials, higher freight prices and increased sickness absences through higher prices and efficiency measures. We posted an EBIT margin for the quarter of 22.8 percent, corresponding to a currency-adjusted year-on-year improvement of 0.4 percentage points.
Good start in Region Europe & RoW
As a consequence of Russia’s invasion of Ukraine, we implemented an immediate stop on sales to Russia and Belarus. For natural reasons, our partners in Ukraine have not purchased any products since the invasion started. These events are deeply tragic on a human level. However, financial impact on the Thule Group is limited since these countries account for less than 1 percent of our sales. Moreover, we have no suppliers in these three countries.
During the quarter, sales in the region increased 9 percent after currency adjustment, compared with an exceptionally strong first quarter in the previous year. Positive to note, was that all four product categories grew during the quarter.
The markets that grew most during the quarter were Germany, Belgium, the Netherlands, France, the Czech Republic and Spain. In the southern hemisphere, Australia, New Zealand and South Africa in particular continued to perform well as these countries concluded their important summer seasons.
Very strong growth in Region Americas
In Region Americas, compared with the exceptionally strong first quarter of 2021, still posted sales growth year-on-year of a full 27 percent in the quarter after currency adjustment.
We grew in all four product categories and in all markets in the region, and where Canada excelled in particular.
Capacity increases and higher inventory levels
As previously announced, we’re investing significant resources to further expand our production capacity to meet the substantial increase in sales. We are satisfied with the projects’ progress, despite longer lead times for everything from building materials to automation equipment.
We have, thanks to increased capacity, been able to better meet the increased demand during the autumn and beginning of the year. We therefore estimate that inventory levels at retail is back at similar balanced levels ahead of the peak season as before the pandemic.
To ensure high delivery reliability and short lead times also going forward, we have continued to build up inventory levels during the quarter ahead of the spring season. In the current times, higher inventory levels are required to flexibly manage the significantly protracted lead times of various components, as well as to anticipate any major delays in the global supply chain. The build-up of inventory comprises components for high-volume products.
Long-term positive trends for current categories and new categories in the pipeline
The underlying market trend of consumers seeking to live active lives close to home remains stable and positive. Over the next few years, we expect general market growth for our existing product categories to be in line with pre-pandemic growth, i.e., around 3–4 percent. Our ambition remains to win market share and to continue to outpace the market growth in our current categories.
We will start growth journeys in two additional product categories in 2023. I look forward to presenting these at the capital markets day in Hillerstorp, Sweden, on Wednesday, May 11. We will also present our modern roof rack factory, our newly opened global development center and our expanded and world-leading Thule Test Center™.