Dometic Group AB (publ)

Welcome to Dometic Q4 Report, 2025. Today I am pleased to present CEO Juan Vargas, CFO Stefan Freestet, and Head of Investor Relations, Tobias Norby. For the first part of the call, all participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by pressing pound key 5 on their telephone keypad. now i will hand the conference over to the speakers please go ahead do Your line is muted.

Hello? Hello? Can you hear us? Yes, we heard it. Okay.

So good morning, everybody. Well, I would like to start by apologizing for the technical problems, but we are back. So good morning, everybody, and welcome to this Q4 and full year webcast for 2025. With that said, let's move into the presentation. Starting with highlights, market, the overall market conditions are still challenging. Consumer confidence is still not what we would like it to be. And at the same time, retailers and dealers as well as OEMs are still cautious in building inventories. Having said that, we also feel that inventories at retail level are improving. They are just now a low level and it's very much just now a question about consumers starting to buy. Looking at growth, 3% negative organic growth for the quarter, with service and aftermarket down 3%, which is obviously an improvement in comparison to previous quarters. Distribution, back to growth, very much driven by mobile cooling. And then we see also improvements from an OEM perspective where it's still marine slightly negative. We also have ALV slightly negative while we see improvements in other areas. Every time margin, 6% in comparison to 7.3, but then we also need to consider that we have a major effect on . So we have a substantial negative effect by currencies, driven by currencies, and we will get back to that on the details. At the same time, as we previously communicated at the end of last quarter, we also have negative impact in mobile cooling specifically from increased labor costs, since we added about 250 new people in the organization. at the same time as we also have the price corrections to compensate for the higher tariffs in mobile cooling. Looking at free cash flow, we ended up at 20 million, which is a bit lower than one year ago, even though they're very much influenced by the currencies. But at the same time, as we have seen more positive oil intake backlog starting to come to the same level as last year, and we have been building inventories for the start of the season in Q2. At the same time, we also had later invoicing in the quarter this year in comparison to last year. All those factors are having an impact on the free cash flow. Leverage ended up at 3.3 in comparison to 3.1 in previous year. If we move over to numbers, sales ended up at slightly above $4 billion for the year with 3% organic growth, 12% FX, meaning obviously a substantial impact, and then 1% negative by the portfolio changes that we are doing. EBITDA ending up at $245 million or an EBITDA margin of 6%, as I commented before, compared to 7.3% last year. We got a negative EPS in the quarter of 67 early, adjusted negative EPS of 39 early, and as commented before, cash flow of 20 million, free cash flow of 20 million, a leverage of 3.3. Moving to the whole year, ended up at 21 billion in sales, with a total negative effect of FX for the year of 6%, 8% down organic growth, and the same 1% on portfolio changes. With EBITDA landing above 2.2 billion or an EBITDA margin of 10.6 versus 10.8. And of course, considering the negative growth, we feel quite proud of what we are achieving, working very, very hard to keep our costs in control despite the negative. top line decline. EPS ending up at 1.34 EUR with an adjusted EPS of 2.52 EUR and a free cash flow of above 1.4 billion. Obviously, we're still not there, but we're starting to get close. As you can see on the graph, we are coming from hovering around 10, 11, 12%, quarter by quarter for the last three years. And we saw Q3 landing on minus 6%, now minus 3. And as commented before, we see orientation improving. Difficult to say, obviously, when we are going to see Dometic moving into positive territory. But it's quite clear as well that we are getting very close. Looking at defense segments, land vehicles ended up at minus 4%, with Americas down 10%, EMEA positive for the quarter, plus 1%, APAC minus 10%. Marine came back to a negative growth of 3% after a slightly growth shown in Q3. And we don't see that as anything strange. Obviously the market needs to stabilize. We are coming from pretty negative growth. We saw plus one, now we see minus three. We are expecting obviously to see improvements moving forward as well. Mobile cooling, good to see that we are back to growth and optimistic about the expectation for June 26. and then global ventures minus three percent and we'll come back later to some more details on the different segments looking at different channels no major differences in reality is really we see service and aftermarket becoming a little bit higher on the share while the oem channel is becoming a little bit lower ending up at 13 percent And just as comparison, we are coming from a situation, 2018, where the VM side stood for 62% of total sales. Looking at different channels, again, it's quite obvious that we are moving in the right direction. So it's not the market. We were positive in Europe while we were negative in Americas. Distribution, as I commented, we have positive in parts of global ventures and positive in mobile cooling having an effect, a 2% positive effect on the distribution channel. And then OEM is also quite clear that, on one side, the European market is stabilizing. We see, especially in Southern Europe, that we are starting to see growth, while Central Europe is still sitting on a little bit too high inventories, even if they are coming down. So we expect, even from that perspective, improvements moving forward. We also saw, as a matter of fact, the commercial vehicles showing growth for the quarter, and we have seen growth for the entire year. So that's also a positive sign that things are improving. Looking at EBITDA, as I commented at the beginning, 6% versus 7.3 last year. Looking at the underlying margin when comparing like for like, 2.9 higher than one year ago. FX, again, we will get back later, but had a major impact this specific quarter. We also have the additional label cost and the comparison to duty drawbacks in mobile cooling that we commented in previous slides. quarter was going to have an effect also in Q4. We are happy to see gross margins improving, ending up at 28.7 versus 26.8, despite the lower sales. So it's clear that the restructuring program is biting quite a bit. And on top of the restructuring program, we also have a number of other activities to increase efficiency overall in the company. And then even if we are showing negative everyday development in the quarter, we also see that both land vehicles and global ventures are showing better margins despite the currency situation. Moving on the specifics to land vehicles, we have on land vehicles, let's say, so 1.8 billion with organic growth, negative organic growth of 4%. We got decline in both channels, but as I commented before, growth. on the cpv channel as part of land vehicles and we also showed growth in emea for the first time during the last five quarters which is telling us really that the lv the rv business in europe is stabilizing every day higher 66 million in comparison to 10 to 3 million last year or 3.6 percent every day margin with clearly a positive impact of the global restructuring program As we commented when we announced the program, the LV segment was going to be the one showing the major impacts during that program. We see both increased profitability in EMEA. We see reduced losses in Americas and APAC still delivering pretty high margins despite the drop on the top line. Marine down in organic growth 3% with sales and aftermarket stabilizing as well, flattish in comparison to one year ago and single digit decline in the WM channel. Evitae, almost 200 million krona, or 18.5, so a slight decline on the Evitae margin, defending, in other words, protecting the margins pretty well despite the drop in the top line. In this case, the margin decrease is very much due to the currencies. Stefan is going to come back to you. And then we see even there that we are doing a pretty good job in reducing costs to compensate for the drop on the top line. Mobile cooling, organic growth, positive. That was a positive in the quarter. We see a strong recovery in North America in Q4 in comparison to Q3. On the negative side, obviously, the margin in the quarter is not coming as a surprise. We also already announced that we had on one side the positive one-time effect of the 63 million coming from the duty drawback, at the same time as we also have inefficiencies caused by labor, since we employed, again, about 250 new people, at the same time as we have additional training costs, and at the same time as we implemented prices, but the prices are kicking in in January. So we are not expecting negative effects from those factors from January this year. Moving over to global ventures, ending up a 3% negative as well, with good continuous organic growth in other global verticals, at the same time as we see decline in mobile power solutions driven by the software industry, even if it's improving. And even here, we are pleased to see that EBITDA margin is improving 7.1, and also in absolute value is improving to 20 million in comparison to 24 last year. As a consequence, on one side of the sales mix, positive sales mix, at the same time as we keep working on reducing our cost. On sustainability, we are happy to see progress in all areas but one. So injuries coming down to, I would say, all-time low in this case after a lot of investments that we have been doing across the company to improve in this area. Female managers up to all-time high, 31% in a quarter. We would like, obviously, we will continue to work in that area. but again, showing progress. Energy, renewable energy operations, 37%, and also beating our own targets, while innovation index, the same, ending up as 23% in comparison to 21% one year ago. And that's a super important one because that has an immediate impact as well on climate. So new products drive lower climates