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Message from the CEO

Dear reader,

Last year was another important year of transition for the Accell Group. In the first full year of implementing the refined strategy we introduced in 2018 - ‘Lead global. Win local’ - our European business recorded solid turnover growth of 7.5%, with higher added value now at 30.7%, and higher EBIT of € 60.0 million.

All regions showed strong growth except the DACH region, which recorded 1.8% turnover growth due to delayed innovations (incl. Haibike Flyon) and lack of product availability. The Netherlands in particular successfully restored growth and profit on the back of successful innovation, promotions and winning the e-bike of the year 2019 award.

Our cargo bike business Velosophy outperformed the market with a 47% annualised growth with gross margin well above group average. Building on a great team effort in 2019, from 2020 onward we will produce all cargo bike frames in Turkey and assemble and spray paint all cargo bikes in Heerenveen. This will pave the way for shorter lead times, more savings, higher margins and an even more competitive consumer proposition (colours/graphics).

In the second half of 2019, we sold our loss making North American operations (around 6% of total turnover and net losses of € 18.8 million in 2018) following a decision taken at the end of 2018. This will enable us to focus fully on our profitable and growing European business from 2020 onwards. Following this divestiture, the Group’s return on capital employed is now 11.4%.

The e-bike trend was once again very positive in 2019. E-bikes accounted for 79% of our overall bicycle turnover in 2019 (74% in 2018). This constitutes a 13.8% increase in e-bike sales compared to 2018. The bicycle parts and accessories operations in Europe also performed well in 2019 and recorded a solid increase in turnover.

Our group bike sales volume declined in 2019, mainly due to the sales of our North American business. Our European business saw a decline in sales volumes of -0.8% to 943,000 bicycles sold. The decline in the sales of regular bikes also continued.

We achieved another € 13 million of supply chain savings in 2019, € 6 million of which ended up in our bottom line. The main drivers of these savings were a strong focus on reducing complexity in our ranges, the implementation of our platform strategy (frame families) and further rationalisation in our supply chain and business footprint.

We booked progress in terms of both product availability and the ‘in-full, on-time’ delivery of innovations in 2019, although there is still plenty of room for improvement. The Haibike Flyon sets the new standard in e-MTB performance. Unfortunately, we had to delay the production until November 2019, which resulted in a shift in sales from 2019 to 2020. Product availability issues due to weak forecast accuracy, combined with this innovation delay, resulted in temporarily higher levels of component stocks and working capital towards the end of the year (32.4% of turnover at year-end 2019).

On the IT front, we defined a roadmap for the enhancement of our ERP / CRM systems and our digital platforms. We also rolled out a new CRM B2C platform in all our regions, in addition to the first go-live of our single brand platform in all regions (Haibike). In 2020, we will focus our resources on the harmonisation of our data and processes across brands, products and countries.

Finally, we refined our Corporate Social Responsibility (CSR) strategy for the coming five years. We care about the Earth and people, which is why our ambition is to make sure that everything we do helps to build a better world and that we are part of the solution to the challenges we all face. Cycling contributes to a better life, better living conditions and a better environment. Within CSR, we will continue to focus on reducing our environmental footprint through responsible production, the reduction of our energy consumption, the transition towards sustainable energy and, for example, reducing single-use plastics.

Summing up, we are seeing improved results and promising developments in many areas within the group, clearly demonstrating that we are on track to deliver our long-term financial targets. Our focus is now on additional performance improvements by continuing to optimise our processes, especially in the areas of sales & operations planning, speeding up innovation delivery and data/process harmonisation. In 2020, we will continue to work on the transition of our business and on continued growth of both our top and bottom lines. Main drivers of growth in 2020 are innovations like Haibike Flyon, a new high end e-cargo bike under the brand Carqon, Ghost Nirvana, Lapierre Aircode, business to business opportunities like the bikes for the Dutch police and bike leasing in general.

Last but not least, I would like to thank all our staff and our partners for their commitment, hard work and loyalty in 2019.

Ton Anbeek
Chairman of the Board