31/10/2022

31 October 2022
31 October 2022, Comments Comments Off on Dometic third quarter 2022 report shows net sales growth of 37%
Dometic third quarter 2022 report shows net sales growth of 37%

The Dometic third quarter report, 2022, shows net sales of SEK 7,576 m (5,545); an increase of 37%, of which -6% was organic growth. Operating profit (EBITA) before items affecting comparability was SEK 1,057 m (879), corresponding to a margin of 14.0% (15.9%). Items affecting comparability were SEK -326 m (-23) and were mainly related to activities in the previously announced global restructuring programs. Profit for the quarter was SEK 436 m (480).

Dometic President and CEO, Juan Vargues commented on the third quarter 2022 report:

“In a complex and challenging market environment we delivered substantial net sales growth of 37 percent, a solid EBITA margin before items affecting comparability of 14.0 percent (15.9) and an improved operating cash flow of SEK 812 m (346). Organic net sales declined by 6 percent mainly due to reduced Service & Aftermarket sales as retailers globally are rebalancing their inventory levels. In addition, sales to Recreational Vehicle manufacturers (RV OEM) specifically in the US declined as expected. The Marine segment continued its strong performance with organic net sales growth of 11 percent and it is encouraging to see how the acquisitions we made during 2021-2022 are contributing with profitable growth.
 
Our results show how we are transferring into a more diversified and resilient company with a larger exposure to low ticket discretionary spend products. Distribution and Service & Aftermarket accounted for 57 percent (50) of total net sales in the quarter while the lower margin RV OEM business accounted for 23 percent (31). 
 
EBITA before items affecting comparability improved by 20 percent to SEK 1,057 m (879), corresponding to a margin of 14.0 percent (15.9). The Igloo business showed strong results with double-digit organic net sales growth (pro forma) and improved EBITA margins above 10 percent supported by price management, product innovation and cost control. As expected at the time of the acquisition, the Igloo business still has a dilutive effect on Group margin. The EBITA margin for the EMEA segment was disappointing at 8.6 percent (14.8). The EMEA segment margin was negatively impacted by the sales mix and by extraordinary logistics-related costs of SEK -35 m as a consequence of the congestions and leadtimes in the supply chain combined with a decline in market demand. All other segments delivered an EBITA1) above that of the same quarter last year.  
 
Operating cash flow for the quarter was SEK 812 m (346). Inventory levels remain elevated impacted by long lead times and weaker demand in Service & Aftermarket. Excluding the currency impact, inventories were stable compared to the second quarter and going forward we expect inventories to start trending down. The net debt to EBITDA leverage ratio was 3.0x, compared to 2.9x at the end of the second quarter of 2022. The increase was due to a weakened SEK against the USD and EUR impacting our debt balances at quarter end, this was partly offset by a stronger cash position. There is a strong focus on cash flow across the Group and we are committed to achieving our net debt to EBITDA leverage target of around 2.5x.
 
We are optimistic about the long-term trends in the Mobile Living industry and we are encouraged by the results generated from our strategic actions. However it is difficult to predict how the current macroeconomic situation, including high inflation and geopolitical uncertainty, will impact the business in the short term. We expect a gradual recovery of the demand in Service & Aftermarket coming quarters and a continued stable development in Distribution. In OEM we foresee a continued weakened demand coming quarters. In this challenging environment we are actively balancing our capacity with market demand, while at the same time investing for future profitable growth. While being agile and closely monitoring and acting on short-term market evolution, we will continue to implement our strategic agenda to deliver on our targets”