International growth contributes to a continued strong sales increase in 2018

Read the report in attached PDF

Financial results for the period:

• Number of Hövding sold during the fourth quarter increased to 19,061 (14,945) (+28%)
• Net sales increased to TSEK 29,349 (21,437) (+37%)
• Gross margin of 27% (22%)
• EBITDA of TSEK –10,104 (-7,497)
• Result after tax TSEK –11,158 (-9,782)
• Result per share SEK -0.50 (-0.72)
• Cash flow from operating activities TSEK -18,182 (-19,505)

Financial results for the year:

• Number of Hövding helmets sold during the financial year 2018 increased to 61,208 (40,087) (+53%)
• Net sales of TSEK 92,535 (56,695) (+63%)
• Gross margin of 23% (22%)
• EBITDA of TSEK -38,830 (-31,803)
• Result after tax TSEK -41,480 (-40,988)
• Result per share SEK -2.44 (-3.49)
• Cash flow from operating activities TSEK -18,419 (-47,345)

Key Events in the period

COLLABORATION WITH LEADING UK BICYCLE RETAIL CHAIN
Hövding Sverige AB (publ) initiated a collaboration with UK’s leading bicycle retail chain Cycle Republic. Hövding was launched in their flagship store and online ahead of the 2018 Christmas period, and will be extended to the remaining stores during 2019.

RESULTS OF THE NEW SHARE ISSUE OF HÖVDING SVERIGE AB PUBLISHED

The subscription period for the new share issue of Hövding Sverige AB (publ.) concluded on 31 August 2018, and the count shows that the emission reached a subscription of just over 202 percent. Subscription backed by the new share issue corresponded to approximately 99.6 percent of the shares offered. The new share issue gives the company approximately MSEK 74.3 before issue expenses.

Double the turnover in Germany 2018 - international growth for Hövding

The turnover during the fourth quarter increased by 37% compared to the same period in the previous year. The number of Hövding helmets sold increased by 28%. This is good growth although lower than expected, as delays in delivery resulted in a delay of sales that were processed in January insted. We are now catching up with delivery, and when looking at the October-January period, the sales increase compared to the same time in the previous year is +56%. There is a continued very strong demand in the marketplace.

2018 was a very good year with a growth of +63%. The year’s key markets, Sweden, Denmark and Germany, have all experienced strong growth. Above all, it’s interesting to see how positive the development has been in Germany. Sales in that market increased in 2018 by +96%, and in the second half of the year by as much as +118%.

Our strategy to increase the number of retailers in sports- and lifestyle chains has been successful. During the year, German Sportcheck and Globetrotter have gone from zero to 8% of the turnover in Germany during Q4. This paves the way for continued expansion and strong growth in 2019.

During the fourth quarter, we also notice how our efforts to improve the gross margin is starting to show good results. The gross margin is 27% (22%). Better negotiation of purchase prices coupled with quality improvements have more than compensated the negative effect of all purchases occurring in Euros, while a significant part of sales is conducted in Swedish Krona. 2018 ends on 23% (22%) with an upward trend.

The focus for 2019 will largely be on the planned launch of Hövding 3.0, now connected, making Hövding safer as well as creating opportunities for collaborations on new levels. Our development team is currently spending time on the manufacturing step to implement the product and prepare it for mass production. Some key project milestones remain, but the launch is scheduled for autumn 2019.

2019 is an important year for Hövding. It is a year of continued international growth. We are adding the UK and London as a focus market and continue establishing ourselves in Germany. Hövding 3.0 is an important part of this, and commercially, the effort will be our most substantial one so far. Meanwhile, we secure our ability to produce the world’s best head protection for cyclists, more effectively and in larger volumes. This year is the springboard towards reaching a turnover of over MSEK 250 and a positive result in 2020.

Fredrik Carling

VD, Hövding Sverige AB (publ)