Thule Group AB (publ)

Good morning or good afternoon and welcome to the Tula Group Interim Report Q4 and End Year Report 2023. My name is Adam and I will be your operator for today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand the floor to CEO and President Matthias Ankelberg to begin. So Matthias, please go ahead when you are ready.

Thank you so much. Welcome everybody to this Q4 call. I have with me also our new CFO, Toby Lawton. Some of you have met Toby already, and for the rest of you, I hope you will soon. But as it is, Q4, we will cover both the quarter and the full year today, and we will follow the presentation available on our website and on the conference call. Starting on page two and with the overview, the quarter is a delivers a solid result in what is still a tough market, as it was in Q3. Sales declined 5.6%, currency adjusted, and sales trends are really a continuation of what we saw in Q3. We will get back to that. As we also saw in Q3, we are, of course, pleased to see that new Tudor products continue to drive growth, also in a tougher market. EBIT improved a lot versus last year, 53 million versus four last year, and the cash flow is particularly strong in the quarter with 276 million. Turn to the full year, what stands out is really the cash flow. Sales was down minus 15%, currency adjusted. We had a quite weak start to the year with an improving sales trend for the second half, also partly driven by comparables. And an EBIT margin which was somewhat below last year, 16.5% versus 16.8%. And all-time high cash flow from operating activities at almost 1.9 billion Swedish. The ordinary dividend proposed to the AGM is SEC 9.5, 9.50 per share. And... Thule is in a financially strong position. We've always generated a lot of cash flow, and particularly so in 2023. And we are focused as a company on how to use the shareholders' funds in the best way. And having reviewed our plans and initiatives for 2024, together with the board also, we conclude that we can do all the investments and growth initiatives that we plan and still have financial capacity to pay a dividend of 9.5 sec per share. On page 3, turning to the reported net sales and EBIT figures, in the quarter, a decline of 1651 to 1566 in reported Swedish millions, and the corresponding EBIT increase of 253 million from four versus last year. For the full year, which I haven't talked so much about yet in numbers, we just see a sales of 10.1 billion Swedish last year versus 9.1 this year, corresponding to that 15% decrease in constant currency and a 10% in reported and an EBIT margin reduced to 16.5 compared to almost the same 16.8 last year. in EBIT versus 1.7 last year. On page five, talking about sales trends, which I mentioned initially, we really see in Q4 a continuation of the sales trends we saw already in Q3, except the general market environment, which is still characterized by cautious consumers and retailers. We see one big plus and one minus in terms of category performance. The plus for us, which again we saw already in Q3, is that bike-related products are back to growth, at least Thule bike-related products. And bike-related products is a big part of Thule these days, so that's of course very positive for us to see. On the minus side, the RV, recreational vehicle industry, is in a weaker position. in a weaker situation, and it is our only exposure to a cyclical segment, and we saw that that started to turn down in Q3, and that continues in Q4. The difference between the quarters is mainly the mix. So in Q4, it's our smallest quarter. We don't sell a lot of bike-related, as people don't bike as much in a wintery quarter. However, the RV sales is fairly flat, and that comes out as a small positive growth in Q3, but in a different mix and negative in Q4. We will turn to page five and talk about sustainability. Thule has ambitious financial goals, but we also have ambitious sustainability goals. And one of the most important goals that we focus a lot on is the CO2 reduction or greenhouse gas reduction targets that we have. And it's positive to see that the development is trending in the right direction also in 2023. We are working with this in many different ways and to highlight two important areas. I would like to mention our transition to green electricity and energy, where we are currently installing, for example, heat pumps in our biggest factories. And also the work, secondly, we do in terms of product design, to design products already from the start with a climate footprint in mind. And one really good example is Thule Epos, our newest and most premium bike carrier that not only is our most premium, but also one of the best in terms of CO2 footprint. And by designing consciously around other types of materials and solutions, we have, or our design team has done a great job of creating a product with about half the CO2 footprint of the equivalent or comparable products. So good to see the progress in CO2 reduction, and of course a lot more work remains. Another key area for Thule is our product development and our focus on driving growth through product development. And on page six, we could see the investments that we do in the product portfolio. We are currently in the most ambitious product development phase or period in the company's history. We have invested equivalent of 6.9% of sales in R&D product development during 2023. There are two positive news around this. One is in the sales numbers, we see that new Tudor products drive growth also in a tough market. And secondly, we have, thanks to these investments, more new products than ever before coming to market in 2024. So we will get back to that soon. Before we get back to that, I will now turn to Toby to cover the financials in San Francisco.

Thank you, Matthias, and very good to be here, and good morning, everybody. If we turn to the next slide where we have the reported income statement, and I'll start off here on the quarter, and when you look at the sales line, you can see we had a decline in the quarter versus last year of 5.2% or 5.6%. And this is driven, as Matthias has said, really by the decline in RV versus last year, while we see growth in other categories. If we go down to the gross margin, in quarter four, you can see the gross margin improved to 37.2%. This is an increase of nearly 6% versus prior year. And the drivers are the same as we had in previous quarter, with lower material cost We have lower freight costs, particularly inbound freight, and also a favorable product mix. Just looking at the full year here, our gross margin also improved on a full year basis and is now at 40.9% versus 38.1% last year. So it's back to levels pretty much in line with pre-pandemic levels on gross margin. EBIT margin in the quarter, 3.4%. Here it's very important to remember that quarter four is the seasonally low quarter, and that does also impact EBIT margins, as you can see. We had selling expenses in the quarter were increased versus last year, and this is driven by the increased investment in product development that Matthias just showed on the previous slide. That's the main reason. Admin expenses have reduced in the quarter. If we look on a full year basis then at EBIT margin, you can see EBIT at 16.5% versus 16.8% last year. So pretty much in line with our year on EBIT margin. And finally, going down to just for the tax line, the effective tax rate is very stable, exactly the same percentage as last year, 22.6%. And then net profit on the bottom for the full year, we generated just under 1.1 billion SEC of net profit. If I click to the next slide, a few words on cash flow. We had a very strong cash flow for the year. One of the main drivers was operating working capital, which you can see at the top here. And you can see the components of working capital on the right as well. Overall, we reduced working capital from 3.3 billion down to 2.4 billion, so a healthy reduction during the year. Accounts receivable and accounts payable were both pretty stable, although contributed positively to cash flow, whereas the big impact has come from a reduction in inventory. And we've managed to reduce inventory during 2023 with 800 million SEC, so a big impact. We had a target of 600 million for the full year, so we're ahead of the target that we set ourselves. And we're also now targeting a further reduction of 200 million SEC during 2024. So we expect to reduce inventory by 1 billion over the two years. And this is really feeding through in a strong cash flow, as you can see at the bottom, cash flow from operating activities. If I firstly take the quarter, quarter four, we had a cash flow from operating activities of 276 million. In the quarter, it was mainly driven by a reduction in accounts receivable. And that's partly the seasonal pattern of TULA. And then if we go to the full year, you can see a full year cash flow from operating activities of slightly under 2 billion SEC. So 1.85 billion SEC. So a very strong cash flow. And this is more than a billion, 1.2 billion better than prior year. And again, driven by... to some extent and a large extent by the reduction in inventories, but also the strong cash flow generation from the underlying business. So with that, I'll hand back to Mathias.