Dometic Group AB (publ)

Good morning, Juan Mark speaking. Good morning to the presentation of this second quarterly report for 2024. Moving over to the highlights in the quarter, looking at the market, we still see tough market conditions. So no major changes from that perspective. If we talk in general terms, then we will, of course, look to the different sales channels we have. We see also retailer inventories coming down very much in the US, but also in the other areas, which is also leading obviously to a better situation for our service and aftermarket business as well for distribution, while we see OEM still weak. Looking at performance, we are happy to deliver a good margin improvement considering, obviously, the loss that we have on the top line. Service and aftermarket down 1%, which is a substantial recovery in comparison to Q1 of this year, but also very much in line with our expectations after the last quarter. Distribution also, a clear improvement, ending up at minus 2%, very much driven by mobile cooling solutions. And then on the OEM side, 17% down, with negative growth practically in all areas. And what we see, the major difference we see really in the quarter is that we start to see the negative effects also in LV, in LVMA region. Every time margins, as I mentioned previously, good margin improvement, 14%. We have to consider obviously that last year we have a one-time effect, positive effect of 33 million. So the improvement is really 0.3 percentage points in comparison to one year ago. We continue to work on our efficiency improvements. We continue to work obviously on the pricing and then we have a positive effect on the sales mix. At the same time, as we also have a negative effect of segment mix, where as you most probably have seen, marine is down 17% and they are very high margin business for us. That means in reality that this is the fourth quarter in a row with improved margins despite the loss on the top line. We're also very happy to report a continuous strong cash flow, which is clearly helping down our leverage. If we move over to the numbers, 8% down on organic growth, EBITDA down 9%, EBITDA margin ending up at 14% in comparison to the 13.7% of last year when correcting for the one time off that we had one year ago. Adjusted APS of 1.76 krona, a strong operational cash flow of almost 2 billion krona, and a leverage down to 2.9 in comparison to 3.2 that we were showing one year ago. If we move over to the yesterday numbers, 14.2 billion after six months, or 10% organic growth. So we have a sequential improvement in comparison to Q1. Every day down 9% with margin of 13% in yet to date in comparison to 12.7 that we were showing one year ago. Adjusted EPS of 2.96 and operational cash flow of almost 2.2 billion in comparison to 2.6 billion one year ago. looking at organic growth this is the ninth consecutive consecutive quarter where we are showing negative growth and our expectation is obviously obviously that we will start moving outwards from this point so with that what we would like to say is that the draft we have passed the draft so to say from a growth perspective if we look at the safe mix no major changes uh perhaps worth to comment that on one side OEM is all-time low in terms of percentage of sales while distribution is all-time high as a consequence obviously mobile cooling moving upwards at the same time as the OEM business is coming down moving over to service and aftermarket happy to see service aftermarket coming back in Q2 in comparison to Q1 and now we are starting to get close to largest numbers We see clearly when looking at the upper side of the upper chart on the slide, we see that the traditional historical seasonal pattern is changing. And that's really a consequence, obviously, of dealers being very careful in building up inventories and ordering in the very last minutes. And I believe that we are going to see exactly the same situation for a couple of quarters until the situation stabilizes. At the same time, we see the retailers are destocking, and that's what we see now when we are moving upwards percentage-wise in comparison to last year. And what we can see when talking to dealers is that consumers are still repairing, they're still using the vehicles, but of course they are cautious in spending more money than absolutely necessary just now to get out on the road. Again, we don't foresee any major changes as far as the interest rates still are at a pretty high level. If we move over to the EBITDA margin, we are of the opinion that we are doing a pretty good job in protecting our margins despite the drop in sales. and the negative segment mix that we have. So the reality is that we have all the lower margin businesses improving the margins at the same time as both LBC where we have very high margins and Marine where we have very high margins are just now having a negative impact on the sales, the negative sales. Having a look at the different segments, LB Americas, Organic growth down 13%. We showed good growth in service and aftermarket in the quarter at the same time as we still have decline in the OEM. And we are clearly prioritizing margins in this case since that's where we have the lowest margins for entire group. Improvement on every day and every day margin ending up at minus 1.1 in comparison to minus 2.5. very much supported by the mix, meaning service and aftermarket moving to positive territory at the same time as OEM is still in negative territory. And then we keep working on reducing our costs and finding the right balance. If we move over to LV EMA, 6% down organically, with growth in service and aftermarket as well, decline in the OEM. And I would like to mention here that we continue to see positive registration numbers while we were 3% down in registrations during the first half of last year. Now we are plus 6% in registrations in the first half of this year. And to those first six months of this year, we need to add also last quarter was also positive. So on one side, we see that the market is developing really according to our expectations. We knew this was coming. At the same time, now we see registrations moving upwards, which means that perhaps the drop is not going to be as deep and as long as we expected. Especially, I mean, the good news in this case is that registrations are increasing despite the still high interest rates. EBITDA, good improvements in EBITDA margins, moving from 11.7 to 13.7. Same, same. So on one side, we keep working on efficiencies. We have the closure of the factory in Siegen that we completed during 2023, and that's having a positive impact. And then we have also, obviously, the sales mix in the service and aftermarket is growing. If we move over to LV in the APAC region, negative growth in the same way, minus 11%. We service and aftermarket in this case below last year. We are growing in distribution. We see that the RV industry in Australia is having a tough time. This is not the first quarter, so we have seen this now for two and a half quarters, I would say, and that will continue for a couple of quarters additionally. Still, we are very proud, obviously, of showing very strong margins today, ending up at 29.9% in comparison to 31.4%. Moving over to marine, another OEM, very tough market on the OEM side, organic growth down 17%. At the same time, we need to keep in mind that the first half of last year, we were showing nice growth. And the iteration started really in June last year, and they continued during the remainder of the year last year. So in this case, we are expecting, obviously, some gradual improvements in comparison to the situation that we had during the second half of last year. Single-digit decline in service and aftermarket. And I'm coming back to the same comment. Just now, we will see some volatility on the service and aftermarket, since it's very much about dealers waiting until the very last minutes. So we might be seeing some growth one quarter and then some reduction next quarter, but we are moving upwards. That's what we can confirm. Evitae margins, even in this case, good margin protection, ending up at 23.4 versus 26.2 one year ago. And it's very much sales-driven, the drop on the top line. while we are doing a good job in protecting our margins on one side through cost reductions, but also having support by the sales mix. In this case, obviously, suction aftermarket is dropping less than the VM side, at the same time as we see also the percentage of electric steering growing still today in comparison to the rest of the steering systems. Mobile cooling ending up floutish at the same level as one year ago. We saw the positive trends in the mobile cooling area in the second quarter. We saw retailers starting to order again as we expected, same as for marine. We had organic growth in Q1, Q2 last year. Then retailers started to balance their inventories during the second half of last year and Q1 this year. And now we are seeing more traction. So we are optimistic. We continue to take market share on the hard coolers, which is good to see. And we are very positive. We are very optimistic after the launch of the first compressor driven cooler under the Igloo brand. ABTA, strong 20% in comparison to 10.2 last year when you exclude obviously the one of positive effect that we have one year of 33 million. And the improvements are very much driven by innovation, meaning new products, but also becoming more and more efficient. And then moving over to the last one, global ventures showing negative growth of 5%, very much driven by the drop in the residential market in the US. Every day, even there, we have good margin protection, 15.1 versus 15.6, despite the lower sales. And in this case, we are investing quite a bit in IP, developing our IP in the mobile power solutions area that we started to consolidate at the beginning of the year. Moving over to innovation, we just launched a new range expansion for our active coolers. So we have a very strong position with our CFX3 series. We introduced a CFX2 series to capture a higher portion of the market where we are present today. We also launched a new camping stove and the Dometic and Kavak brand, which is also moving in a very positive way during the first couple of months, as well as a shelter. In both cases, we continue to invest in developing more sustainable products. And this is also the case with these two products. Last but not least, and this is just a few of the pro launches that we had during the quarter. We also launched the new PLB15, which is a new portable lightweight battery for outdoor applications and nonetheless to be connected to our own cooling boxes. But again, this is valid for our own cooling boxes as well as for any other electronic device that should be charged. And we will continue to invest in innovation, especially in the areas where we are expecting high growth, high margins moving forward. With that said, Stefan, let's move into the finals.

Thank you, Johan. Starting off with reflecting on the EBITDA development in Q2. As already has been mentioned a couple of times, we had a one-time effect of 33 million in Q2 last year related to EGLO and to tariff reimbursement in that part of the business. So with that taken into consideration, we have an improvement of 0.3% units in our underlying margins. Looking at the different details, obviously the organic sales decline has been impacting the EBITDA in absolute terms. Then the gross margin has improved with 0.3% units. uh if we take them the 33 million into consideration it's 0.9 percent units improvement driven by efficiency improvements and it's including the closure of the manufacturing in segan which happened mid-year last year and then we have lower raw material costs which are also Kicking in more and more as we are turning over our inventory, then we have sales mix and price management also contributing to this development. R&D and SG&A expenses are increasing to 14.6% from 14% of net sales. We are continuing to invest on R&D in strategic growth areas like marine mobile power solution and mobile cooling solutions. And then that is partially offset by cost reductions in SG&A. We have very limited effect on FX in the quarter and obviously no effect from M&A. Moving over to cash flow. As Sean already mentioned, we are really happy with the continuous strong cash flow, almost 2 billion. And that was obviously... supported by reduction of inventory and reduction of working capital in general. So inventory level is down 900 million versus last year, which is happy to see that. Income tax paid are slightly lower than last year. However, commenting on the tax rate here, it's higher than last year. But this is following the comments that we did in Q1 already. And it's driven by that we have a higher amount of profits in high tax year restrictions. And it's also partially related to non-tax deductible interest costs. Financing, there is a big swing in that. The different parts of that, we pay dividends, 607 million, which is a little bit more than last year. Then we have the net of paid and received interest, 320 million versus 258. However, in Q2, as you can see, sorry, we'll leave it by that. And then 750 million in private placement was signed in the second quarter in 2023. Moving over to CapEx and R&D. CapEx is coming down a little bit. We have been tougher in prioritizing as the situation is right now with a tougher demand. So CapEx is 0.9% of net sales in the quarter and 1.9% over the last 12 months. Looking on R&D, it's 2.1% versus 2% last year. And it's driven by what I mentioned before, investment in structural growth areas, mobile cooling solutions, NPS and marine. And over the last 12 months, we have 2.4% in R&D expenses in relation to net sales. Taking a look on our net debt to EBITDA, we have been coming down to 2.9 compared to 3.2 times one year ago and sequentially coming down from 3.0 from Q1. and it's obviously driven by the strong operating cash flow and it's a high focus as well in protecting margin and reducing working capital around the organization. I can also just repeat that we are committed on achieving our leverage target of around 2.5 and we are expecting that the leverage will continue down during the remainder of this year. Taking a step into working capital, accounts payable are stable and more moving depending on mix. When we buy less in China, the number of days goes down a little bit as we have the longest payment conditions in China. Perceivable stable 44 days. So nothing to report there. And then we can see on the inventory side coming down to 141 days, which is obviously in relation to what has been mentioned before. We can also see that the inventory balance compared to one year ago is 6.7 billion compared to 8.4. And we are continuing to take actions to optimize working capital towards the target of 20% of net sales. It's obviously a bit of a difficult KPI when we have the organic sales decline as we have. So I still think that the underlying work with reducing working capital is absolutely moving on according to expectations. Summarizing the operating cash flow, almost 2 billion in the second quarter compared to 2.3 in the same quarter last year. And it's like I have reported before, we are expecting that the strong cash flow is going to continue. We are not going to achieve the record high that we had last year, but still strong and solid for the coming quarters. Moving into our debt maturity profile, as you might remember, we did sign in March 2024 a new agreement with the second tranche of our credit facility, which then concerns the term loan of $333 million. That is now moved out to 2027 with a one plus one year extension option. Then we have also amortized 100 million dollars July 1st, according to plan. And then the revolving credit facility has been increased by 80 million euros. So it's now a total of 280 million euro and it is undrawn. And the average maturity by this has been extended from 2.2 to 2.5 years. If we include the extension options, the average maturity is three years. And for the time being, the average interest rate is 5%, and it's slowly going to trend up. With that, I hand over to you, Jean, to summarize.

Thank you. Thank you, Stefan. I mean, the market is where it is. It's not a lot that we can do about, but we continue to drive performance improvements, and we are happy to report improved margins, strong cash flow, and a leverage which is moving south, trending down. We are very happy to see as well the distribution of the market are moving upwards stepwise, and that should continue. then if we talk about the future our expectations is a little bit more the same so we continue to see service after market as well as distribution moving outwards stepwise we are not going to to see a major massive improvement in one quarter we will see that in steps uh while we see the vm still remaining pretty weak all over the place. Some areas, as we saw, the US market is stabilizing, but stabilizing at a low level, while the rest of the OEM businesses are coming down. Strategically, more the same, we will continue to drive our strategic agenda. We have a better balanced mix today than we had a few years ago, which is obviously helping us to maintain our margins at good levels. We keep investing in growth areas. Stefan mentioned a couple of times some of the areas where we believe that we have an underlying growth, structural growth moving forward as we want to put more of our resources and our investments. And we will, in other words, continue to prioritize margin expansion in order to achieve our financial targets. And with that said, I would like to open for the Q&A session. Please.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. Please mute your line when you have asked your question and please limit yourself to only two questions. You can also write your questions on the webcast page. The next question comes from Frederick Ivasan from ABG. Please go ahead.

Thank you. Morning, gents. First, can you talk about the market climate in Europe or European RV a bit more? I guess it seems like the manufacturers are becoming more cautious and prolonging the factory holidays and so forth. So to what magnitude is this sort of impacting your business in the short term? And also, if you could talk about your your expectations for the aftermarket in Europe, specifically in the coming quarters?

I mean, for us, Frederik, I'm wanting to start with, but for us, it's not coming as any surprise, right? I mean, we have been talking about this now for a couple of quarters, and it was very much expected. I think that our customers are becoming more cautious at the same time as I have to say that I am just now more optimistic perhaps than they are, simply because I see registrations coming outwards despite the fact. So that means that consumers are taking out vehicles, existing vehicles, at the same time as interest rates are pretty high. So at this point, my expectation is that they drop. is going to be there. It is already there, by the way. We see already now negative numbers on the VM side, but our expectation is that it's not going to be as deep and as prolonged as we expected when registrations were very much down during the last, I would say, two years before Q4 last year. So that was on the VM side. On the aftermarket, it has been moving upwards, and I continue to expect gradual improvements moving forward. It has been, I mean, we have never seen such a drop historically, not just in the European region, but in the rest of the regions the same. So we have seen exactly the same behavior from consumers. We have seen the same behavior from our dealers. And we see obviously that the inventories that the dealers were carrying out for the last 18 months, they are kind of fading away stepwise. I believe from the same perspective. that once we see interest rates coming down, I do believe that consumers are not just going to repair, which is absolutely necessary, but they are also going to start to upgrade their vehicles. They are going to start buying more accessories than they have been doing the last couple of years.

Thanks. Very clear, Juan. Second question also on EMEA, where the margin has been picking up quite nicely recently. Where were you on those extraordinary costs? If we could start with those in the quarter, I think you were at 55 million in Q2 last year. And also, if you could talk about where you are in terms of efficiency or inefficiency in the Hungary plant after the move from Segan.

I mean, we are still not at the levels that we have in Segan, obviously, after all those years, but the situation is improving for every day. We have people fully dedicated to that. On the cost efficiencies, on the impact, we are talking in the quarter about 25 million. And we see again that we will see gradual improvements moving forward. Again, moving a factory takes a while before you get the same efficiency as you have in the old factory. But that's taking place. And part of that is what we see clearly on the margins. So the margins is the combination of a number of things. As we communicated, we have a positive sales mix in the segment, clearly. We have also the efficiency gains that we have in Hungary in comparison to the situation we had one year ago and the lower level cost. We have also some lower raw material prices as we are consuming the inventories that we built up at a high cost. And then we continue to drive our price management. I mean, just now, obviously, you all know the situation on the Red Sea, and we continue to maintain our margins. So margins are improving.

So I would say... The extra cost.

The extra cost on human logistics in comparison to the initial point is... So, I mean, we are high still today. We are high on logistic cost. So I have commented, we have not given the numbers by segment, but we have commented that logistic cost has been two percentage points higher during 2023 and beginning of 2024. They used to be prior to the pandemic. They are still high, but we have come down, I think it's 0.3 percentage points in comparison to the situation we had. So improving slowly.

Okay. Good. And then if we could move to mobile cooling, the underlying margin there obviously up a little bit if we clean for the tariff refund you had last year. What were the sort of key drivers behind that margin expansion?

I think it's innovation. The fact that we are launching higher price, higher margin pros with every single product launch. We have obviously that we are becoming as well less depending on the American market. So mobile cooling today is a global business. We're introducing the new ICF products, carrying, once again, high average prices and higher margins everywhere. And we are very, very happy with the product launch. Then at the same time, it is clear that when we carve out the organization from the automatic in terms of cooling boxes and put together with the EAGLE organization, we also have efficiency gains in that area. So it's a combination of both.

Okay, good. And last question from my side, if we could get some help with your expectations from what's going on on the raw material side and also with the higher freight rates that we see at the moment as you look into the coming quarters.

No, our intention is, as we have been proving during the last years, is obviously to protect our margins by price increases at the same time as we are looking for cost reductions. It's clear that we see higher freight costs still very far away from the situation that we had 2021-2022. I mean, you can read in media that prices went up basically by 100%. since May this year. At the same time, they are still very, very low in comparison to where we are coming from, $18,000, as we were a couple of years ago. So we feel confident that we will be able to protect our margins even moving forward.

Okay, good. Thanks. That's all my questions.

Thank you.

The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.

Yes, good morning, Juan and Stefan. A couple of questions from me. And coming back to mobile cooling, where you clearly are making strides and you sound very happy with the active cooling launch in the North American market and the expansion of the brand, Eagle Brand, to Europe and Australia. I look at sort of, and you have sort of a flat development on the quarter, but I sort of, my understanding was that you were in a negative territory at the start of the quarter and implicitly that would mean that you had maybe growth towards the end of the quarter. Is that what you saw as a trend?

That's totally correct.

And is that a function you think more of sort of retailers restocking on the old assortment or is it a good uptake of the new assortment combined with sort of restocking the old?

Daniel, it's a combination. I mean, keep in mind that we were growing very nicely, even if many other areas of the business were coming down. Cooling boxes has been extremely stable even in the last, I would say, 20 years. Then we got into June last year, and we saw a dramatic change in the way retailers were behaving in terms of inventories. They really pulled the brake. I guess that they built up too much inventory during the first half of last year on the expectation of a better 2023. It never happened, and then they pulled the brake. And that's really what led to a situation where, for us, they were quartering. So we have seen a rebalancing of their own inventories. Now we have the opposite situation. Now we have very low inventory levels. Then, of course, the mobile cooling box market reflects also the situation with the weather. We are coming from a Q1 that was pretty bad, especially March was pretty bad in North America. And of course, out of mobile cooling, North America is kind of 70, 75% of the business. Pretty wet, pretty cold. We moved into Q2, better weather. people start buying new products. And at the same time as we are launching new products on continuous basis, and we introduce the ICF, which is higher prices, higher margins. The good news in this case is that when looking at the statistics from MPD, we are growing both in dollars, which is telling you clearly that our mix is growing, but we're also growing in units. So it's not just average prices. So there is a consumer demand, Hopefully the consumer demand is going to keep growing unless we see really poor weather in the coming weeks, but now we are in the middle of the season. So the expectation is that the improvement will continue at the same time, obviously, as we have the active cooling boxes in more and more stores. So that should lead to improvements moving forward.

Yeah. And sort of if you try to dissect it, are you equally happy with the launch of the brand internationally as you are with the sort of active cooling solution in the US? Or is any one of these two factors that have been surprising on the upside or on the downside for that matter?

It goes much, much faster in the US because obviously we already have an organization having all the connections with all these major customers. Europe Igloo has not, has historically not had a strong brand. They were non-existent, right? So it will take a little bit longer, but it is moving as well. Sorry. Yeah.

And given what you're saying, listening to that, and given what you're saying in terms of innovation driving the margin performance in mobile cooling, Is it fair to say that it's more important for the margin short term to have a good uptake of the active cooling business in the U.S. rather than the international expansion?

Yes. But I mean, keep in mind that the U.S. market is by far the largest market in the world. No matter if we are talking about passive coolers or active coolers.

Okay. And it's really in the lines.

Yeah. Yeah. I mean, like in many other outdoor businesses, the American market is very, very often 60% to 70% of the world market, no matter if we are talking about boats or we are talking about coolers. Yeah. And that's why, Daniel, that's why the Eagle acquisition was so strategically important for us. Not just under the Eagle brand, but really to promote the active coolers so we could grow both under the Eagle brand and as a domestic brand.

And are you seeing competitors picking up on the technological shift that you are driving in that market?

Not so far. I think the market is still today a pretty small market. It's not that we don't have competitors. Of course, there are competitors, but they have no presence. And they have not the kind of distribution that we have. I mean, keep in mind that Igloo has been in business now for 77 years. It's not just about picking up a couple of customers, also to have the distribution capability, is to have the logistics in place, is to have the service network in place. So we feel confident about our capabilities moving forward. And of course, that's also one of the reasons for investing more and more in accelerating that growth.

And you're happy with the price point that you've come up with. I think you have five different sizes and sort of how you sort of position them versus what's out there.

Yes, I would say that we are talking specifically in the American market without any kind of doubts. We are talking about the rest of the world. That's also one of the reasons for launching the CFX-2, because the CFX-2 will attack a different portion of the market where we have seen the growth has been. Again, keep in mind that in the entire Outdoor space, companies, sorry, companies, consumers, but also retailers have been trending down. If you look at the CFX3, the CFX3 is the most premium product that you can find on the markets. At the same time, as we have seen, obviously, that customers are asking for lower price points, even for compressor coolers. And that's why we started to develop this product 18 months ago, according to our plans. Yeah.

jumping to another topic uh you touched upon in the presentation when it comes to marine and you also said that um sort of if you're optimistic on service and distribution you you keep being quite pessimistic on the oem business uh but you also mentioned that it was in june last year where they started really to see the drop in the oem business in marine yeah And just sort of, has anything changed in terms of the trend in OEM marine as of late? Or is it reasonable to assume that given the comparison or the change, that you will have slightly less negative performance in that business in the coming quarters?

That's our expectation. Then, of course, you have also the retail levels, right? If we think, I mean, and this is moving every single month. So, I mean, the theory is, yes, absolutely right, Daniel. We have much easier comps than we had one year ago, clearly. At the same time, we have retail numbers from April when the sentiment on the marine market was more optimistic. And then they got the number from May, and May was, again, more pessimistic. So, again, we will move upwards from low levels. And then the question is, how much? And I think that we will need to evaluate that month by month as we are getting all the numbers. But the last four quarters have been pretty negative for marine OEM, clearly.

Thank you. That's all for me.

Thank you, Daniel.

I think we step in here with a question from the web. It's for you, Stefan. Thinking about the Eurobond market and the 2026 refinancing, when could you come back to that market?

Yeah, I mean, the Eurobond market is a very important source for us in our financing. Let me state that, first of all. So then we have also noted that the market and the margins you pay has been coming down considerably during the first part of this year. Then it's, of course, a matter of timing. I mean, as you see, we did pay back 100 million US dollar here, 1st of July. Our ambition is that we will continue to use some of the funds that we're generating to pay back debt. But we are absolutely in the euro bond market to stay there. So I still think it's a little bit early to expect that we're going to do something with the 2026, but it's approaching. Thank you.

Back to you, operator, for more questions.

The next question comes from Agnieszka Wylela from Nordia. Please go ahead.

On Europe and RV, I appreciate the fact that the registrations are stable or even growing, but actually when we look at the orders and order backlogs of the RV OEMs, they have been declining quite much sequentially, which also suggests that the dealers don't want to take on the new product and maybe there is some inventory glut. As we see the production cuts at the OEMs, do you think that this kind of production correction and volume correction will be done this year already, or will we also have the negative RVOE growth into 2025?

I think my firm opinion, I would say, is that we are already seeing production cuts. So it's nothing new. I mean, it's already there.

And how long will they... Do you have any kind of visibility on how long they will proceed with production credits?

I do believe that that will depend, obviously, on interest rates and that will depend on the registrations. Again, that's why I'm a little bit more optimistic that I worked one year ago because I see registrations coming up while they were pretty negative in 2022 and they were pretty negative during the first half of last year.

Thank you.

I don't think that the RVOM industry is going to fly 2025.

All right. And on mobile cooling, you are running at 9% EBITDA margin in the last 12 months. Can you tell us, is there any difference in profitability between Iglo and your active boxes business?

Historically, it has been, without any kind of doubt. It has been much higher. on the domestic side, and it has been on the EU side. Then, of course, you have inventories built up 2021, 2022. Hopefully, those inventories are fading out stepwise, and we will see higher margins coming also from the domestic side to the historical levels that we have been in.

Have you seen more of a kind of inventory correction at retailers on the domestic side?

Yes, but not as pronounced as we have seen on the American side.

and maybe a follow-up on the profitability level for your mobile cooling. I think when you acquired Iglo you had an ambition to kind of move that business towards the 15% EBITDA margin. Do you still find this level attainable given that you're at 9% margin for mobile cooling right now and also what needs to happen to reach it?

I think that we need to continue working in the same way as we are working. Working on the geographical mix, working on the product mix without any kind of doubts i'm working on the channel mix and i do believe that since the the localization you have seen margin improvements on igloo as well i know that we were kind of pretty criticized at the beginning right when they came in with q3 and pretty negative q3 uh 21 and since then we have been improving margins stepwise so i mean we we simply need to to be better and driving pricing as we've been doing in recent quarters, but also on innovation, new product production and completing the pro range. So we see market improvements moving forward as well.

But still the gap is quite high, no? From 9% today to 15%.

That's what we get paid for.

Okay, perfect. Thank you. You're welcome.

That was the last question at this time. So I hand the conference back to the speakers for any closing comments.

So, well, I would like to thank you all for your attention. I know this is a busy day for all of you, clearly with a lot of companies reporting. I would like to finalize by thanking my team for what we believe is a fantastic job under still today tough market conditions. Again, margin improvements. strong cash flow and lower leverage. So thank you very much for your attention. Happy holidays for those of you having your vacation period in front of you. And I see you soon. Thank you.