Mips

October-December 2023

• Net sales decreased by 15% to SEK 91m (107), organic growth amounted to -13% during the quarter
• Operating profit amounted to SEK 17m (24)
• Operating margin was 18.8% (22.0)
• Cash flow from operating activities amounted to SEK 31m (47)
• Earnings per share, diluted, amounted to SEK 0.60 (0.71)

January-December 2023

• Net sales decreased by 37% to SEK 357m (563), organic growth amounted to -39%
• Operating profit amounted to SEK 70m (229)
• Operating margin was 19.7% (40.7)
• Cash flow from operating activities amounted to SEK 11m (236)
• Earnings per share, diluted, amounted to SEK 2.42 (6.63)
• The Board of Directors proposes a dividend of SEK 6.00 (5.50) per share, corresponding of 249% of net earnings during the year

Challenging market conditions persisted during the fourth quarter
In a generally challenging market, it was positive to notice that we showed growth in our most important sub-category, bike, this quarter. In the fourth quarter, the market continued to present challenges in the Motorcycle category, there was somewhat slower development in the snow sub-category in Sport and exchange rate effects had a negative impact. The combination of these factors led to a decrease in sales of 15 percent this quarter. Overall, the order inflow increased compared with the same period last year. 

Net sales decreased by 15 percent (13 percent after adjustment for exchange rate effects) in the fourth quarter. For the full year, net sales decreased by 37 percent, and after adjustments for exchange rate effects the organic net sales decreased by 39 percent.

In line with our long-term strategy we have continued to invest in product development and brand-building initiatives this year. The costs associated with these activities, combined with what we deem to be a temporary decrease in our net sales as well as negative exchange rate effects, had a negative impact on profits in the fourth quarter. Operating profit amounted to SEK 17m (24) during the quarter. For the full year, the operating profit decreased to SEK 70m (229).

The operating margin amounted to 19 percent (22) in the quarter, and for the full year it amounted to 20 percent (41). The operating cash flow developed well, amounting to SEK 31m (47) during the fourth quarter. The full-year operating cash flow amounted to SEK 11m (236). The decrease in operating cash flow compared with the prior year was primarily due to paid tax in the first quarter of 2023 for high earnings in 2021, coupled with lower earnings for the full-year 2023.

Helmet category Sport – bike showing growth again
We saw a buck in the trend in the fourth quarter compared with the last five quarters. Since autumn 2022 the bike sector has been dealing with something called the “bullwhip effect” caused by an overly aggressive build-up of inventory during the rapid growth that took place during the pandemic. The bike sub-category is a very important sub-category for us, and during the fourth quarter we witnessed a growth in sales and saw positive developments at most of our major customers.

Within the snow sub-category the market was initially restrained, but it recovered towards the end of the year after a strong start to the winter season, mostly in the European market. However, in the short-term, the impact of the positive start to the season on Mips’ sales is relatively small as there is not enough time for our customers to get products to market before the current season ends. This means that growth prospects look good for the following season as inventory levels are now
generally considered to be low.

We have previously stated that, in our assessment, the bike sub-category will see a positive development in 2024. This assessment remains unchanged. We believe that the majority of the growth in this sub-category in the coming years will be driven by our customers buying products from us to enable new production of helmets, in contrast to the last few quarters when they have sold helmets they already had in stock to their customers in retail.

Helmet category Motorcycle – still a tough market, but we see a turn for the better
Growth continued to be weak in the Motorcycle category with a decrease in net sales of 66 percent this quarter. The decrease in net sales was due to the soft market for the motorcycle sector, mainly caused by macroeconomic trends. This had an even larger impact on Mips as the overall weaker market growth coincided with higher inventory levels of existing helmets at a number of Mips’ most important customers.

These high inventory levels of existing helmet models without Mips’ technology limit our ability of launching new products together with our customers, which is an important element of our future growth plan in this category. Even though the roll-out of these new models has taken longer than planned, during the spring we will collaborate with our partners to launch many of the new products that have been developed during the last year.

Helmet category Safety – good inflow of new customers and higher volumes going forward
In summary, we are happy with what we have achieved in the Safety category in 2023. Our goal for the year has been to establish a broader customer base and grow the number of products equipped with Mips safety system. We now have a total of 15 brands with which we have launched partnerships. We continue to see a robust increase in sales growth, even though the market roll-out of new helmet models has taken longer than estimated.

During the important World of Concrete tradeshow in Las Vegas, USA in January 2024, no less than six new models equipped with Mips safety system were launched, which is a substantial addition to the existing portfolio of 15 models.

Now that we have established a solid platform of many partners, our focus in 2024 will be on driving volumes, in other words ensuring that sell-through to end customers really take off, and we look forward to an exciting year of growth.

Sustainability – great progress with recycled material
We have made important progress in our sustainability efforts during the year, and we have delivered on all three of the main goals that were set for the year. During the year, we reduced our climate impact by more than 12 percent and we expanded the range of solutions made from recycled material. We now offer all our customers a recycled Polycarbonate alternative in our most-sold safety solution. I am very satisfied with the progress we have made in our sustainability efforts this year and that we have accelerated this important work.

Still forward-leaning, despite challenging external conditions
Even though we have faced challenges during the last year, we are convinced in our long-term strategy.

We see greater penetration of the Mips safety system and an increasingly positive view of our brand, both amongst our customers and in the channels where helmets equipped with Mips’ technology are sold. We are also seeing that our strategic investments in a wider product range for more categories is starting to gain traction.

I am naturally not satisfied with the financial performance in 2023. It has been a difficult year with challenging external factors that we have done our utmost to counter. We have continued to advance our position and have strengthened our offering and Mips as a brand. This has been possible thanks to our sustained investment in our strategic initiatives. We are confident that we have the right strategy, which will continue to support our long-term plan and journey towards our financial targets.

I would like to give my greatest of thanks to Mips’ employees and all our partners around the world who, despite all the market challenges, still work tirelessly to make the world safer by equipping more helmets with Mips safety system.

Stockholm, February 2024

Max Strandwitz
President and CEO