Abeo: “We aim at least 10% growth in turnover”

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Abeo, a family business specializing in the manufacture of sports and leisure equipment, is reaping the benefits of a drastic drop in operational breakeven amid a health crisis. As the Paris 2024 Olympic Games approach, founding boss and main shareholder Olivier Estèves tells us about his confidence in the future of his company.

How do you see Abeo’s annual accounts?

Oliver Esteves: Our fiscal year is solid and very satisfying, given the distorted geopolitical and economic environment. Thus, our turnover increased by 18% to 205 million euros and our EBITDA to a record 26.4 million euros, reflecting a never-before-reached margin of 12.8%, up 1.8 pp. These results, which are the highest since the public offering, confirm the strategy of the performance plan, which was initiated at the beginning of the crisis we emerged from. Finally, Abeo has significantly reduced its debt and our teams are mobilized to deal with new phases of the company’s development.

How would you explain this subtle recovery in current operating margin?

OE: With the full-year impact of the performance plan carried out at the height of the health crisis in the previous fiscal year, aimed at lowering our breakeven point by 20% and thus breaking our fixed costs. It enabled us to absorb inflation in some raw materials and achieve record profitability of 26.4 million in value and in terms of ratio (12.8%).

Is the group hampered by supply disruptions, logistical difficulties or inflation in raw materials and energy prices?

OE: We are less dependent on energy. On the other hand, we are experiencing some pressure on the supply and prices of some raw materials such as wood, steel and aluminum. This phenomenon is not based on the outbreak of war in Ukraine. We were already observing this during the health crisis. By diversifying our sources of supply or by overstocking without too penalizing our working capital needs, we have been able to demonstrate agility and responsiveness to adapt. That’s why Abeo is approaching the new fiscal year 2022/2023 with calm and confidence.

Will you beat the price hikes? Is it easy in the sports and leisure equipment segment?

OE: We have been trying to reflect inflation to our customers for about a year. Secondly, they understand this very well and they are hospitable and I thank them for that. A reassessment of our prices across our entire product range accounted for 3 to 5 points of 18% growth in turnover over the past financial year. And that without affecting our business dynamics. This remained very strong with very well directed order intake of €222.5 million, a sharp increase of 30.1% compared to the previous fiscal year.

Exactly, what are the best oriented market segments and most active principles?

OE: Our businesses, which suffered the most from the health crisis, are now recovering very strongly. For example, this was the case in our Sports & Sports & Leisure & Climbing divisions, which posted sales growth of 19% and 26% respectively, while the more resilient apparel segment grew more modestly (+11%) during the crisis. ). Same observation by customer type. Private investors interested in opening climbing gyms or gymnastics academies, for example, are the most active today after they disappeared from the market in the midst of a health crisis. By country, the recovery in the USA is very strong. On the other hand, it is more modest in Germany, after showing considerable flexibility with private and public investors who have never stopped investing during the pandemic.

How much will you enjoy the 2024 Paris Olympics?

OE: Major sporting events like the Olympic Games are a great showcase and a powerful vector of communication for Abeo. The company was already present at the Games in London, Rio and Tokyo in the three sports for which we supplied equipment: basketball, gymnastics and climbing. Beyond being a catalyst for turnover and profitability, Abeo’s participation in the Olympic Games represents tremendous exposure with very positive indirect effects on the group’s pre- and post-event performance. We procure the equipment and collect it after the competitions. For now, Abeo has been selected for the Paris Olympic Games for the 5 and 3 basketball competitions. Negotiations regarding the climbing and gymnastics competitions continue and we are confident in ourselves.

What other important events do you attend?

OE: We strive to take part in world-class events such as world championships, continental championships (pan-American, European, Asian). For example, our French brand Gymnova, the world leader in gym equipment, will secure two world championships when the Paris Olympic Games are held in 2024.

Are you after foreign growth opportunities while coming out of the crisis? In which geographic region and in which market?

OE: Acquisitions are part of Abeo’s DNA. Simply put, the market was suspended during the health crisis and we’re starting to see files circulating again. Our criteria are the same: objectives must evolve across our three businesses (Sports, Sport and Climbing, Cloakroom), offer complementary expertise, and have a stronger presence in our geographic regions (Europe, Americas and Asia). Our priorities continue to consolidate our positions in Asia and the Americas, but nothing should be overlooked in Europe.

What financial resources does the group have?

OE: Net debt falling to €80.5 million for equity of €105.8 million last year is substantial, with net cash flow generation of €20.4 million and available cash of €65.9 million. Having a very strong financial position, the Group is entering a new value creation cycle with dynamism.

What are your expectations for this year? Are you setting longer-term goals?

OE: Our goal this year is to continue growing steadily. For this reason, we aim for at least 10% organic growth in turnover before making any purchases. The priority is to achieve a solid level of operational performance despite the growth context and of course to generate positive net cash flows. On the other hand, visibility remains too uncertain to plan long-term.

You continue with a dividend policy that has been suspended for two years due to the health crisis. Can you remind us of the main principles?

OE: As a matter of fact, the company, which was put on hold during the pandemic, saw fit to continue a distribution strategy for its shareholders. Therefore, at the next general meeting on 19 July, a dividend of 0.4 euros per share will be proposed, corresponding to a redistribution of just over a third of net income. The rate is slightly above the normal average, but the group has chosen to strive to gain confidence in the quality of its foundations and keep up after two years of suspension.