Mips Interim report January - June 2024

April-June 2024

• Net sales increased by 31% to SEK 133m (102), organic growth amounted to 31% during the quarter
• Operating profit increased by 125% to SEK 52m (23)
• Operating margin increased by 16.3 percentage points to 38.9% (22.6)
• Cash flow from operating activities increased by SEK 20m to SEK 29m (9)
• Earnings per share, diluted, increased by 101% and amounted to SEK 1.53 (0.76)

January-June 2024

• Net sales increased by 14% to SEK 216m (190), organic growth amounted to 14%
• Operating profit increased by 70% to SEK 65m (38)
• Operating margin improved by 10.1 percentage points to 30.3% (20.2)
• Cash flow from operating activities increased by SEK 53m and amounted to SEK 20m (-33)
• Earnings per share, diluted, increased by 50% to SEK 1.96 (1.31)

CEO’s comments

Strong quarter in a market that has started to normalize
Total net sales grew organically by 31 percent this quarter compared with the prior year. Growth was primarily driven by the more normal inventory situation we're seeing in the Sport category. We grew in all regions and categories this quarter. In the important bike sub-category, we’ve seen a positive growth trend since the fourth quarter of 2023, with a gradual improvement in sales. This is mainly because both the market and the inventory situations have improved, but it’s also due to the launch of many new helmet models equipped with our technology.

The organic growth for the first half of the year was 14 percent, which is consistent with our expectations – a return to good organic growth once inventory levels in the bike sector normalised. We are seeing positive developments in all our categories, while the inventory issues that we, and the market generally, have been challenged by for so long are now substantially more limited. That’s why our sales now better reflect actual retail sales to consumers.

The positive trend in the Motorcycle category continued this quarter, and in the Safety category we’ve carried out a number of exciting launches together with major brands.

Thanks to our scalable business model and the increase in net sales during the quarter, we saw an improvement in this quarter’s operating profit of 125 percent, amounting to SEK 52m (23), and the operating margin therefore improved substantially to 39 percent (23). During the first six months of the year, the operating profit has increased from SEK 38m to SEK 65m, and the operating margin has improved, reaching 30 percent (20). This is despite the fact that we stuck to our long-term strategy and continued our ambitious investments in product development and marketing. The operating cash flow amounted to SEK 29m (9) in the quarter, and for the first six months of the year the cash flow was SEK 20m (-33).

Helmet category Sports – strong progress in all sub-categories this quarter
We achieved growth of 33 percent in the Sports category, and for the third quarter in a row we delivered growth in the bike sub-category. Inventory levels at both our customers and retailers have now returned to healthier levels. While not all retailers and helmet brands have fully resolved their high inventory levels yet, the problem has now become more local in terms of helmets, but some challenges still remain, primarily for other bike products. This means that for stores and brands access to capital is more limited and their desire to build up helmet inventory levels is thus also less. That’s why we still believe that our sales growth this year will mainly be driven by our customers buying products from us again, along with the fact that more helmet models are being launched with our technology.
 
Sales in the snow sub-category have been good during the quarter, helped by a weak comparative figure from the same quarter last year. In summary, we've seen good progress also in helmets for snow sports for the first six months of the year. Positive developments have also continued in the equestrian sub-category and we're seeing more and more consumers requesting helmets that are equipped with Mips’ technology.
 
Helmet category Motorcycle – continued growth in the quarter and a better market
In the Motorcycle category we achieved 14 percent growth in sales in the quarter and our assessment is that the consumer market in this category will be somewhat more positive going forward. We're seeing increased demand in the on-road sub-category, while the market in the off-road sub-category is somewhat slower, affected by a more challenging inventory situation. Our targeted sales initiatives have started to have an impact and more helmets equipped with Mips’ technology are being launched in the market, which is driving growth despite the challenged underlying market. Our focus going forward is to continue driving consumer sell-through with our customers.
 
We held our first Safety Symposium this quarter, in collaboration with the sector organisations MXGP and FIM that sanction all world championships in motor sports. More than 60 percent of all riders that place in the top ten in world championships use helmets equipped with Mips’ technology. Knowledge of Mips is thus constantly growing and we are experiencing a lot of interest and curiosity in Mips as an organisation, from the media and from the sector more broadly. This is an important platform for us to be able to continue our global efforts to increase awareness about the harmful effects of rotational motion.

Helmet category Safety – new helmets launched and a solid platform for continued growth
In the Safety category we have kept up the good pace in terms of launching new partnerships and new helmet models with these customers. In April we launched our forestry partnership with the highly reputable Husqvarna brand, and in May the first helmet equipped with Mips’ technology was launched in collaboration with the leading global brand MSA. Even though sales volumes have been slightly slower than we would have liked, our assessment is that there will be an escalation in sales this autumn and we therefore remain positive about prospects for this category.
 
Recovery is in line with our expectations, and we’re confident about the rest of the year
This quarter developed as we expected and I’m happy that all of our sub-categories grew during the quarter, despite a challenging consumer market. Our customers are still showing a great deal of interest in developing new helmets equipped with Mips’ safety system in all three categories, and we completed the highest ever number of helmets developed with our technology this quarter.
 
We remain convinced that we have the right long-term strategy, with a major focus on innovation and steadily building a well-recognized ingredient brand that makes us an essential partner to the helmet sector. This strategy will also support our long-term plan going forward and our journey towards achieving our financial targets.
 
Stockholm, July 2024
 
Max Strandwitz
President and CEO