29/10/2019

29 October 2019
29 October 2019, Comments Comments Off on Dometic reports 2% growth in net sales in third quarter
Dometic reports 2% growth in net sales in third quarter

Dometic has reported an increase in net sales in the third quarter of 2019 by two percent to SEK 4,605 million (from SEK 4,501 million) with an operating profit (before depreciation and amortization) of SEK 792 million (compared to SEK 835 million for the same quarter last year). It has also announced it is launching a global restructuring programme that will affect around 20 locations, including manufacturing, warehouses and offices, and 1,500 employees working in these locations.

Juan Varges, President and SEO of Dometic said: “Market conditions in the quarter remained similar to what we have seen throughout 2019. Despite a challenging global trading environment impacting us in the quarter , we are pleased with our underlying performance delivering net sales growth of two percent, continued high operating profit and a strong cash flow.

Our focus continues to be delivering on initiatives that support our long-term strategy. A number of key hirings are in place to drive new growth areas and aftermarket focus. The innovation index is rising and is now at 16 percent and we have seen a 14 percent SKU reduction during the first nine months. I am also pleased to see inventory reduction progressing at a good rate whilst the opening of a larger site in Mexico in August will make us more competitive going forward.

During the last 18 months we revised and started the execution of our strategy to build an even stronger and more profitable company long term by broadening our addressable market, increasing our efficiency and further reducing our exposure to cyclicality and seasonality. As part of our strategy, and considering the current market situation, we are now accelerating the optimization of operational structures by launching a global restructuring program. The program focuses on outsourcing of non-core activities and consolidation of locations. The execution of this program, in combination with a strong financial position, will allow us to deliver on our financial targets and take full advantage of the many opportunities ahead.

The restructuring program is estimated to generate positive annualized effects on earnings of approximately SEK 400 m when fully implemented. We anticipate that the effect will gradually become apparent from the beginning of 2021, achieving its full impact in the middle of 2022. The cost of implementing the program will be around SEK 750 m. It is estimated that the majority of the cost will be charged in the coming 18 months. Approximately 20 locations, including manufacturing, warehouses and offices, and 1,500 employees working in these locations will be affected by the program.

In the short term, the uncertainty in some of our markets remains. Due to continued challenging market conditions in the Americas and the additional impact of US tariffs, the new full year 2019 outlook is negative organic growth, an EBIT margin around 13.5 percent. Leverage excluding acquisitions is expected to be around 2.4x by the end of 2019.”