Interim report January–March 2022

January-March 2022

• Net sales increased by 65% to SEK 137m (83), organic growth amounted to 48% during the quarter
• Operating profit amounted to SEK 62m (39)
• Operating margin was 45.3% (47.4)
• Cash flow from operating activities amounted to SEK 37m (69)
• Earnings per share, diluted, amounted to SEK 1.81 (1.21)

Good growth in the first quarter of the year
The situation in the world has been cataclysmic during the first quarter 2022 with Russia’s invasion of Ukraine and continued challenges in the global supply chain. I am therefore very pleased that we still continue to increase sales with a continuously high profitability.

The positive trend continued in the first quarter with a 48% organic sales growth. This growth is mainly driven by the Sports category, but we also saw good growth in sales in the Motorcycle category.

Operating profit grew by 57% to SEK 62m (39) during the quarter. The operating margin amounted to 45% (47) in the quarter, a reduction that is fully attributable to the foreign exchange effect.

Higher ambitions for our sustainability work
During the quarter we published our 2021 annual report and sustainability report in which we announced our ambition to define sustainability targets that align with the Science Based Targets initiative (SBTi), which we have now done. This means that we have committed to run our business in accordance with the Paris Agreement’s goal of keeping global warming to well under two degrees Celsius and aiming to limit it to one and a half degrees. Our sustainability results will therefore be measured in relation to these goals enabling us to be clearer about the progress that we are making within our sustainability work.

Strong demand for our products but unease and unpredictability persist in the external environment
Whilst we have experienced supply chain challenges during the quarter, we have managed to deal with them adequately. We have worked proactively with risk management and risk mitigation in recent years which has put us in good stead for handling the challenges of the last quarter. In the initial stages of the Corona virus pandemic we had 40 different manufacturing partners, that number is now 83 which has enabled us to manage supply chain disruptions well. In spite of the uneasy and unpredictable external environment we have not once been late with delivering orders, while we also have delivered strong growth.

Helmet stock levels have generally improved worldwide this quarter and our assumption remains that helmet stock levels will normalize towards the end of the second quarter.

It is difficult to get a full view of the external environment, but we're convinced that we will need to manage continued constraints within our supply chain. Nonetheless, our flexible business model equips us well for the next quarter and we continue to see strong demand for our products going forward.

Helmet category Sport – fantastic start within snow helmets ahead of coming season
The good progress made in the Sports category continued throughout the first quarter. The majority of growth this quarter came from the snow sub-category, but we also saw growth in the bike sub-category in the quarter. Growth is still being driven by our existing customers continuing to increase the share of helmets in their ranges that are equipped with the MIPS safety system.

Our view is that consumer demand is still solid, above all within outdoor products. In the bike sub-category we see a positive trend going forward, and even though the stock level situation will normalize over time, in particular for lower-priced bike helmets, we believe that the healthy demand for bike helmets will remain. Within the snow sub-category the year started very well. Sales growth in the different geographic markets has been very good, in spite of the fact that weather conditions have not been optimal in the 2021/2022 winter season. This indicates that consumers have had a pent-up need to get out into nature and be active outdoors even during the winter season. Our assessment is that stock levels for snow helmets will be low ahead of the coming season and that we will continue to see positive developments in this sub-category again next season.

Helmet category Motorcycle – healthy growth in the quarter
We saw strong growth in the Motorcycle category in the quarter with a sales increase of 150%. We have seen a positive trend in the Motorcycle category for a long time now, and we believe that this will continue throughout 2022. Growth is mainly due to good progress with our existing customers, and from new customers launching helmet models equipped with the MIPS safety system.

Helmet category Safety – partnership launched with our first major customer
At the end of April we launched our partnership with uvex, one of the first major global helmet manufacturer in the Safety category. uvex is one of the world’s largest suppliers of construction helmets and we are convinced that uvex will become a strong partner with whom we can work to raise the awareness of the benefits of MIPS’ technology also in the Safety category.

Our previously communicated focus area for the Safety category in 2022 remains the same, to drive sales through our existing customers but naturally also to establish partnerships with new customers.

Capital Markets Day June 9, 2022
As a result of our positive financial progress during the last few years, along with good growth in all our helmet categories and the fact that our addressable market has expanded, we are carrying out a review of our long-term financial targets. We intend to present the updated financial targets, as well as the strategy for achieving them, during a Capital Markets Day on June 9, 2022.

A good start to the year
I am very pleased with how the new year has started for us. Shut-downs in China as a result of the spread of Covid-19 have been challenging both for us and several of our partners during the quarter. Despite this we have successfully navigated through the challenges without experiencing any substantial impact on our sales or financial results.

We are still seeing healthy demand for our products in all categories where we are active, and I look forward to continuing to raise the awareness of MIPS and our technology all over the world.

Stockholm, April 2022

Max Strandwitz
President and CEO