29/04/2024

29 April 2024
29 April 2024, Comments Comments Off on Dometic sales down 10% in Q1 but EBITA margin improves
Dometic sales down 10% in Q1 but EBITA margin improves

Dometic’s Q1 results for 2024 show that net sales were SEK 6,527 m (7,289), a decrease of -10%, of which -12% was organic growth. Operating profit (EBITA) before items affecting comparability was SEK 769 m (847), corresponding to a margin of 11.8% (11.6%), and operating profit (EBIT) was SEK 611 m (667), corresponding to a margin of 9.4% (9.2%). Profit for the period was SEK 273 m (334).

CEO COMMENT

“The first quarter result was further evidence of our transition to a more effective, better balanced and thereby more resilient company. We delivered an improved EBITA margin for the third consecutive quarter despite a challenging market environment impacted by geopolitical and macroeconomic uncertainty.

Net sales in the first quarter 2024 totaled SEK 6,527 m (7,289), which represents an organic net sales decline by 12 percent. Net sales in the Service & Aftermarket sales channel declined organically by 10 percent partly due to a rainier than normal March and an early Easter. In addition, the uncertain market situation is making customers more cautious than before when building up inventories ahead of the high season. Service & Aftermarket net sales in segment Marine remained stable. The retailer inventory situation for our Mobile Cooling Solutions business is gradually improving and net sales in the Distribution sales channel declined by 13 percent compared to a decline of 20 percent in the fourth quarter 2023. As expected, organic net sales in the OEM (Original Equipment Manufacturer) sales channel declined in all segments with the exception of Land Vehicles EMEA.

Despite lower net sales, the EBITA-margin before items affecting comparability for the quarter improved to 11.8 percent (11.6) supported by efficiency improvements, including the cost reduction programs completed in 2023, and continuous price management. In its first quarter as a separate segment, Mobile Cooling Solutions reported a higher margin despite lower net sales supported by sales initiatives, product innovation and cost reductions. The margin for segment Global Ventures improved to 14.2 percent (13.3) fueled by a stronger performance in subsegment Mobile Power Solutions. Segment Land Vehicles EMEA continues to show improvements compared to previous periods while segment Land Vehicles Americas EBITA margin remained under pressure. Several sales and operational initiatives were launched in the Land Vehicles Americas segment during the quarter, and I am convinced this will accelerate our transformation journey and drive efficiencies and gradual improvements. We will also continue prioritizing margins over volumes on the competitive US market where RV industry production remains at a low level.

The operating cash flow was solid at SEK 212 m (294). The net debt to EBITDA leverage ratio was 3.0x (3.2x). We are maintaining a strong focus on cash flow across the Group, and the increase compared to a ratio of 2.7x at year-end 2023 was due to a weakened Swedish Krona and normal seasonality. We expect the net debt to EBITDA leverage ratio to trend down during the year and are committed to achieving our target of around 2.5x.

The product innovation index improved to 18 percent (14 percent) and it is encouraging to see that our recently launched Igloo active cooling product range already is available in more than 600 stores across several of the large retailers in the US. This is further proof of the strength of the iconic Igloo brand. Igloo continues to gain market shares and has been rated the #8 Consumer Goods brand in Newsweek’s Most Trustworthy Companies in America 2024 ranking, well ahead of any other Mobile Cooling brand.

The long-term trends in the Mobile Living industry are strong, however it remains difficult to predict how the current macroeconomic situation and market conditions will impact the business in the short term. Our planning assumptions from 2023 remain largely unchanged; we anticipate the recovery in demand in the Service & Aftermarket sales channel to continue in 2024. In the Distribution sales channel we expect a continued gradual recovery coming quarters as retail inventories decline. In the OEM sales channel we foresee a continued weak demand short-term but with an improvement towards the end of the year. In this environment we will continue to relentlessly drive our strategic agenda to deliver on our targets, prioritize margins before volumes, and at the same time remain agile to quickly respond to short-term market trends.”

Dometic’s full report for Q1 2024 can be viewed here: https://mb.cision.com/Main/10773/3964127/2743836.pdf