Thule Stock Analysis: Top Buy Recommendation

Thule, a leading company in the sports and leisure industry, has established itself as a global powerhouse in the market for roof boxes and bike racks for personal vehicles. With a market share of around 50%, Thule dominates the industry and continues to innovate and produce high-quality products that appeal to outdoor enthusiasts worldwide.

At the helm of Thule is CEO Mattias Ankarberg, who took over the reins in August 2023 from Magnus Welander. Ankarberg, who previously served on Thule’s board since 2018, brings a wealth of experience to the role, having previously served as the CEO of Byggmax from 2016. Ankarberg’s leadership, combined with his personal investment in Thule through owning shares worth 2.6 Mkr, demonstrates his commitment to the company’s success and growth.

Thule’s ownership structure is predominantly composed of funds and institutions, with AMF Pension holding the largest stake at 11.5%, followed by Swedbank Robur at 7.6%. Insiders hold less than 0.2% of the company’s shares, highlighting the confidence that external investors have in Thule’s long-term prospects.

The company’s operations encompass both product development and manufacturing, with nine proprietary assembly plants and approximately 3,100 employees worldwide. Thule’s products are distributed through a network of 30,000 retail partners and specialty retailers in 140 countries, underscoring the company’s global reach and market presence.

Thule’s competitive advantage lies in its focus on product innovation and its strong brand identity associated with outdoor sports and leisure activities. By staying ahead of market trends and continually enhancing its product offerings, Thule remains at the forefront of the industry, catering to the needs of outdoor enthusiasts and adventurers around the world. Thule är ett företag som har etablerat sig i det premiumsegmentet och erbjuder produkter som ofta är dyrare än sina konkurrenters. Deras tillväxt och framgång har varit imponerande under det senaste decenniet, med en genomsnittlig årlig tillväxt på cirka 7,4% från noteringen i slutet av 2014 fram till förra året. Sedan 2020 har företaget upplevt en organisk tillväxt på cirka 6% per år.

Under pandemin fick Thule liksom många andra friluftsföretag en skjuts i tillväxten och ökade sin organiska tillväxt med 13,1% under 2020 och hela 37,7% under 2021. Detta är betydligt högre än den genomsnittliga tillväxten på 3-5% per år i branschen, vilket visar på Thules förmåga att ta marknadsandelar och växa snabbare än konkurrenterna.

Thules bruttomarginal har legat på över 40% i genomsnitt, medan rörelsemarginalen har varit runt 18%. Dessa starka siffror visar på företagets effektiva affärsmodell och förmåga att generera vinst trots sin position i det högre prissegmentet.

Framtidsutsikterna för Thule är lovande, med målet att nå en omsättning på 20 miljarder år 2030. Förvärvet av det australiensiska företaget Qual Road år 2024 för 3,6 miljarder kronor har ökat Thules omsättning till cirka 11 miljarder kronor på pro forma-nivån. För att nå det ambitiösa målet på 20 miljarder kommer Thule behöva upprätthålla en årlig tillväxt på nästan 11%, vilket sannolikt kommer att kräva ytterligare förvärv.

Thule planerar att fortsätta satsa på organisk tillväxt som sin huvudsakliga tillväxtdrivare, samtidigt som de öppnar upp för möjligheten att expandera genom förvärv. Deras strategi är att kombinera både organisk tillväxt och förvärv för att nå sina ambitiösa mål och stärka sin position som ledande aktör inom premiumsegmentet. Med en stark track record och en tydlig tillväxtstrategi ser framtiden ljus ut för Thule och deras fortsatta framgång på marknaden. Thule, the Swedish company known for its outdoor and transportation products, has been on a growth trajectory over the years, despite facing challenges such as negative growth in recent times. Factors like higher interest rates and inflation have impacted the consumer market negatively, but Thule has managed to maintain a strong performance. With a goal of achieving a 20% operating margin and distributing 75% of profits, Thule is focused on sustainable growth and profitability.

In 2024, Thule saw a turnaround in its organic growth, posting a positive increase of 3.5%. One of the key highlights was the acquisition of Australian company Quad Lock, known for its mobile mounts for cyclists and motorcyclists. The acquisition, valued at 3.6 billion Swedish kronor, or 12 times the operating profit, marked a strategic move for Thule to expand its product portfolio and reach new markets.

Thule’s acquisition strategy has been consistent, with the company typically paying 1.6 times the revenue and around 10 times the operating profit on average for its acquisitions. This disciplined approach to acquisitions has helped Thule strengthen its market position and drive growth in key product categories.

In addition to Quad Lock, Thule has made several other acquisitions, including Reacha, Denver Outfitters, Tepui Outdoors, and GMG. Each of these acquisitions has contributed to Thule’s overall growth strategy and product diversification, allowing the company to tap into new markets and customer segments.

Thule’s Q1 report, released at the end of April, highlighted the company’s continued focus on innovation, product development, and operational efficiency. The report showcased Thule’s ability to weather market challenges and adapt to changing consumer preferences, positioning the company for long-term success in the competitive outdoor and transportation industry.

Overall, Thule’s strategic acquisitions, strong financial performance, and commitment to innovation make it a compelling investment opportunity for those looking to capitalize on the growing outdoor and transportation market. With a track record of success and a clear vision for the future, Thule is poised to continue its growth trajectory and deliver value to shareholders in the years to come. Stocks dropped 14% on the news.

The sales in the first quarter increased by 10% driven by the acquisition of Quad Lock. Organically, the revenue was down around 3%. The sales in the quarter were approximately 2% lower than the pre-announcement estimates.

The gross margin strengthened significantly to almost 45% (41). Quad Lock also contributed to this improvement with its structurally higher gross margin. The operating margin fell to 15.1% (17.1). Analysts had expected 16.0%. The decline from the previous year was due to Thule launching more products in the first quarter this year than usual, leading to higher costs and thus a deteriorated margin. Excluding the increased product development costs, the Ebit margin would have been in line with Q1 2024, according to Thule.

Thule allocates approximately 7% of the group’s revenue to the development of new products. Most of the expenses for product development are directly taken from the income statement. Products launched in the past three years account for around half of the group’s total revenue.

CEO Mattias Ankarberg emphasizes that the market was generally challenging. In Europe (69% of revenue), organic growth remained unchanged "despite increased uncertainty in the external environment," according to Thule. The Other Markets region saw a 43% increase in sales. Organically, revenue was down slightly more than 9%.

In North America, which accounts for about a quarter of the group’s revenue, sales dropped 13% organically in the quarter. The market deteriorated significantly during the quarter, and retailers have been cautious about placing orders after the US tariffs were announced. Management has taken several measures in the US to enhance competitiveness.

• New sales organization with dedicated leadership for North America. Thule has also decided to close the office that came with the acquisition of Case Logic in 2007. Instead, employees are now gathered at the regional office in Connecticut.
• Thule is increasing its focus on growing niches where the company has strong positions. For example, new bike racks specifically developed for the North American market are being developed, which sold out immediately upon launch.
• The investment in pick-up trucks is being resumed, as Thule has not launched new products in this category for many years. This winter, Thule Xscape will be launched, a lightweight premium product that enables secure transport of skis, surfboards, roof tents, or other equipment. Both of these product categories are manufactured locally in the USA.
• Thule is discontinuing its investment in car seats in the US due to intense competition. The premium segment is said to be small in the US and the investment costly. However, Thule will continue to sell car seats in Europe, where the company has had a good start and the potential is much greater. Furthermore, Thule has implemented general price increases in North America (by +10% from June 1) to counteract cost increases resulting from the imposed tariffs. Thule has two of its own factories in the USA that produce just over half of what Thule sells in the USA.