Thule Group AB (publ)

Good morning everyone and welcome to the Attulio Group Interim Report Q1 2024 conference call. My name is Chach and I'll be coordinating your call today. During the presentation you can register to ask a question by pressing star followed by one on your telephone keypad. If you change your mind please press star followed by two. I'd now like to hand over to Mathias Ankerberg, CEO and President to begin. Mathias please go ahead.

Thank you and welcome everybody to this Q1 conference call. I am here with Tobi Lorten our CFO as usual and we will talk to a presentation available on our website or on the webcast and then we will follow with questions. So starting on page two we're happy to see a good start to the year of 2024. 8% sales growth and currency adjusted with Europe and the rest of the world continuing to perform a bit better than the Americas. Bike related drives growth for us, new products drive growth for us and RV products continue to decline. We have a very good gross margin flat versus previous year and at a high level compared to historical trends for the first quarter and also the EBIT margin is in line with last year at 17%. Then this is considering that we are as you probably are aware in the most intense product launch year and season in the Tula Group history. Continue to see good development in inventory reduction and in cash flow from operations and we have a target to reduce inventory of a further 200 million this year and we are on track. Some highlights worth to mention already from the start is our well received product launches which we will come back more to of course. We continue to expand our D2C channel to more markets and we've added one more this quarter to Czech Republic and we've also received more product design awards than ever before in Tula history which we are of course happy and proud of. Move

to

slide. Move to slide three please. On slide three. On slide three we can also see that it's nice to see that on a rolling 12 basis we are also back to growth. Tula has had a long history of both sales and EBIT growth for several years and then of course we had a big boost during the pandemic and the decline that followed that but now we see the better second half of 2023 and the good growth in the first quarter of this year. We can see that on a rolling 12 basis last 12 months we are growing and net sales amount to 9.3 billion. We have an EBIT of 1.5 billion SEC and an EBIT margin of 16.5 percent. Turning to page four in addition to you know what I described as a generally cautious market we see some specific drivers of our sales trends this quarter and I alluded to them in the beginning. We continue to see bike related products driving growth for us, new products driving growth for us and RV to decline but since we are a product oriented company we'll go through this and see how this plays out across our four product categories for the quarter. So starting with our biggest product category sports and cargo carriers we clearly see a good uplift from bike related products in the quarter net sales increased by 16 percent compared to previous year adjusting for foreign exchange rates. We continue to see a good development in the premium end particularly of bike related products. Inventory levels for bike retailers are still challenged in the bike industry as a whole but for the Tule products the Tule end of the market we see healthy inventory levels again particularly in Europe. We also see that new Tule products drive growth also in addition to the general market recovery for example our most premium bike carrier Tule Epoch loans during Q2 last year continued to drive growth for us also on an idealized basis. Most subcategories actually within sport and cargo carriers are doing well in this quarter particularly so in the Europe and rest of world region. Within packs bags and luggage we continue to see good growth just like last year and also many years before of the Tule branded products whereas our legacy products as we call them OE and other historical product categories that we are exiting of course continues to decline. So we also see very good performance in our Tule branded products from some specific product launches. We have launched an updated collection of our best selling luggage collection Tule Subterra, Tule Subterra 2 which has been very well received and really helped growth in this category in the quarter and also an updated collection for our most popular duffel bags Tule Casem which also is doing well in the quarter. In addition we note that bike related products bike related bags that is do well also in this category in the quarter. Turning to the next page, page five and continuing with the product category number three, juvenile and pet has been a focused category for us for this quarter with several product launches and see good growth of plus nine percent compared to previous year. We see very good growth in strollers very much driven by our newly launched best selling all-terrain stroller Tule Urban Glide 3 which has been very well received in the market and by consumers now also available in a four-wheel edition and driving really nice growth in this category for us in the quarter. We've also launched our first product within dog transportation our dog crate Tule Alex which of course also contributes to the growth in this quarter. So nice to see a positive development of plus nine percent in juvenile and pet. And then just as in previous two quarters RV products continue to decline as the industry continues to go through a weaker period. And as a reminder RV products is the segment or Tula's only segment where we have exposure to an historically cyclical sector and we are note that the industry is still going through a tough period but our sales is declining less than it did during the autumn. So as customers build up inventory ahead of spring season that helps us for the first quarter specifically and the sales development was minus five percent versus previous year. In addition on the next page I'd like to highlight the number of the record number of product design awards that we have received at the beginning of 2024. We are of course proud of our product as a product oriented company and there are two major international product design awards IF design and red dot design throughout history to last previous years combined received 29 awards and this year alone we received another 23 which we are of course really proud of. And I'm also personally really happy to see that we get design awards both for updating existing bestsellers and for new products in new product categories that we are launching already this year. So several good awards and recognitions to our very strong product development team who are well deservedly recognized. We also see if we note particularly two special awards both from IF design gold award and the red dot award for best of the best to our all-terrain stroller Tula Urban Glide 3 which is as I just mentioned also performed well in terms of sales. And with that I hand over to Toby to cover financials.

Thank you Mattias and good morning everybody. So if we turn to the next slide on the income statement and here you can see the last four quarters on the left of last year and then quarter one 2024 the right hand column which I will focus on and starting with the top line here net sales we saw as Mattias has already presented growth of close to 200 million in net sales which was an FX adjusted growth of 8% so organic growth of 8% in the quarter. Gross margin which you see on the fourth line gross margin was .2% the same level as we had quarter one last year and here we have some positive effect from favorable product mix. When we are strong in bike we also that is a favorable product mix for us. We have some lower material costs versus Q1 last year also positive and then we have a negative effect from what I describe as unfavorable production overhead absorption and this is really the impact of the fact that what we're selling now in quarter one 2024 was produced during 2023. Typically products take six months to get from production to the market or through inventory and to sales so there is some time lag and during 2023 we had relatively low production levels as well so that impacts production overhead absorption. When it comes to the EBIT margin you can see we are on 17% close to the same level as last year and here we have a higher gross income which is generated by the higher sales and the gross profit the higher sales which is good and then we have a higher selling and administration expenses of 50 million in the quarter versus quarter one last year which is as expected and as we've talked about where we have higher costs supporting the new product launches which are happening this year and that's an effect we expect to see during the first half of this year as we've previously talked about. Then finally just going down the tax rate is stable .7% and then net income for the quarter is 300 million SEC. If I turn to the next slide just showing the cash flow and here at the top I've shown the cash flow from operations before changes in working capital and here you can see we had 390 million in quarter one so a good cash flow generation from operations in quarter one. We then have changes in working capital where we have a seasonal increase in working capital in quarter one. The biggest impact here is from accounts receivable where we have an increase of 519 million in quarter one and this is basically because of growth in sales during quarter one with the seasonal impact which will be collected then during quarter two and then inventories where we've seen a good reduction in quarter one of 173 million so we're on track towards our target for the year to reduce inventories by a further 200 million on top of the 800 million we reduced in 2023. Then underneath the cash flow from operations I've just also shown the line for capex and what we've invested in the quarter so we invested 32 million SEC in quarter one and those are all the main impacts that are impacting our net debt so in total if I make a sub total there you see we had positive 57 million in quarter one so our net debt is basically stable at the end of quarter one versus the end of last year just over 2 billion SEC and then net debt to EBITDA margin it's also stable at 1.1 times. So with that yeah I'll hand back to Mattias.

Thank you Tobi. Turning to some forward looking views on the last two pages of the presentation we're now on page nine. This is the most intense product launch year in TULIS history and we are pleased that it's started well but there is much more ahead and as a reminder we are launching three types of products this year we are upgrading several of our best sellers we are launching innovations in existing categories and we are entering two new product categories so in Q2 we will continue to upgrade several of our best sellers we will or have launched now in April a new generation of the world's most sold rooftop TULIS Motion we will launch a new generation of our best multi-sport and the trial bike trailer TULIS Chariot and we will continue to expand our bike carrier portfolio by launching a North America specific bike carrier we call TULIS Rebirth. We're also looking forward to see two new innovations in existing categories in the coming two quarters this quarter we will launch TULIS Outset which is the first world's first tow bar mountain tent the transport rear of car good development from the rooftop tents that we have already had access in and in the third quarter we will see a real innovation in the RV segment TULIS Side Hill which is the world's first removable awning we are also entering two new product categories this year we've already the first category is dog transportation we've already launched the first product the dog crate TULIS Alex in Q1 which has started well and in Q2 we launched the second product TULIS Bexie which is the first dog bike trailer from us and also of course notably in Q2 we will launch our car seats for the European market which we are have prepared for for several years we are now product certified production has started and we will see the first products in Europe's biggest market in Germany in about a month's time wrapping up on page 10 our focus going forward well we are continuing our long-term growth strategy nothing has changed and we are fortunate to have many strengths to build on for the future we continue to see a long-term trend of people wanting to live more people wanting to live active lives which gives us tailwind we build on very strong market positions having global market leadership in our most important product categories and we continue to invest a lot in innovation and quality for future growth we do see a still challenged market in 2024 with forcers retailers and consumers and beneath that some specific drivers which are positive for bike and negative for RV and we continue to expect these to to remain these trends for the coming period our priorities which we have commented on earlier have not changed our focus this year is clearly on sales growth and reducing inventory further as we commented on we keep focusing on product development with more launchers than ever before we are entering more categories with two new categories in 2024 we are working on being more visible to the consumer to show more and to continue growing DTC and to continue to improve our efficiency in our supply chain both reducing inventory and discontinuing some external warehouse services which will help reduce costs what is so not none of that has changed what has changed in the short term is that it's peak season ahead which is of course intense and exciting times for for us we are in the second quarter having a most intense sales quarter a most intense production quarter and a most intense product launch quarter and although the market is still growing we are still working on improving our sales growth and also getting a good energy boost from being recognized also externally with design awards for our many new products so that summarizes and concludes the presentation and we will now turn to operator to manage

questions thank you if you'd like to ask a question please press star one on your telephone keypad now if you change your mind please press star four by two when preparing to ask your question please ensure your device is unmuted locally we'll pause here briefly as questions are registered so our first question today comes from Frederick from ABG please go ahead

thank you so much morning gentlemen i have three questions all the questions i'll take them one by so first one on bike related which was up in the quarter i guess you said sport and cargo was up 16 so is that an okay number for bike related related products as well or was that even stronger

morning Fredrik on bike related products we have bike related products in several of our product categories and actually bike related bags do well within our tax and luggage category and bike related actually does well within rv as well bike carriers for rv in another in an except that's challenging rv market and bike carrier bike related in general is stronger than the plus 16 you have described for sports and cargo carriers that is the entire sports and cargo carriers and bike is standing out driving that growth

yeah yeah of course i historically has been a decent proxy i think but okay stronger than 16 but you don't you don't want to give an absolute number i guess i suppose correct i have to try second question on the product development costs how much of the plan 600 did you do in q1 and what will that sort of phasing look like throughout the year

so we are as you mentioned Fredrik having a high level of product development cost also this year of course natural since we are launching so many new products this year and as commented before it will be tilted toward the first half of the year and as a reminder we also take you know product development costs as sgna costs and even so taking tooling costs i mean that is tools that fit in our own factories to produce the product as sgna and as we are now after close to six years of work launching car seats in the second quarter of course there is a a series of costs connected to that launch for example so we will be heavily tilted towards the first half of the year for the product development costs

yep got it and then will q1 and q2 be sort of equal or or was q1 the peak

no it really follows the product launch trend more or less you could say of course the development costs are different by type of product but as we are launching more products in q2 than we do in q1 and also particularly we are launching car seats in q2 which is a big cost so put it in simple terms you can expect q2 to be clearly higher in product development cost than q1

okay thanks and last question from my side if you could say anything about the performance in the us market to me it looks like the underlying sales development has been sort of declining for a few quarters and that's despite the quite strong consumer market and also the recovery in bike related so can you say anything about the us market and what's going on there

yes absolutely no you are right frederick we have for several quarters seen a weaker development in us in general in the market and for us we do see a little bit of a improved trend sort of quarter on quarter now we're plus three percent in in americas for this quarter but we feel that you know a couple of points around that on one end i guess the us consumer market in general is a little bit of an maybe anomaly economy is strong but consumers and consumer products struggle outdoor space still is challenged with quite a few retailers being challenged doing layoffs restructuring and some even bankruptcy bike industry has had higher inventory levels and still has higher inventory levels in in the u.s specifically so things are moving in the right direction in north america and the u.s but are behind the development in europe with a couple quarters

perfect thank you so much

thank you the next question is from daniel schmidt from gunska bank please go ahead

yes good morning matthias and toby a couple of questions from me and i just wanted to start off with sort of very impressive when it comes to the amount of design awards that you've received and i guess it's it's really a testament to the elevated product development spending that you've been having over the past two years that it's coming through in in very good products at least when it comes to these design awards but do you have any sort of history in terms of the correlation between between the sort of the reception of a design award and the success in the consumer market clearly you seem to be quite happy with urban glide free

yes thank you daniel we are really proud and you're completely correct you know our investments and spend has paid off and on top of that i'm very proud of the team i think is doing a a fantastic job and are well you know well worth the recognition and you know we have looked at same question as you described and the honest and transparent answer is that it varies sometimes you get defined awards for a bit more niche products that maybe are you know not as commercially important as others but of course in general our learning is that it's positive i mean we have particularly when you look at you know best-selling products that you upgrade into a generation and then you get sort of a an almost stamp of approval that you know the the design works with the most recent and modern trends then that gives you know more more boost to that so plus also we should remember this also of course gives us a good uplift in pr and creates visibility which in itself is helpful to support the launches

and especially i assume given that you've received it also in dog crates and car seats which are new product areas for you i guess that's welcomed in that sort of pr aspect of course okay yeah just coming back to demand from another angle do you think that sort of some retailers might have gone too far when it comes to destocking i know that you're quite happy with the levels that you now have in terms of inventory out there among retailers in your particular sort of segment but we had commentary from xxl the other day saying that limited product availability and sort of inventory actually hurt their sales in the quarter

yeah i'll answer that question in two ways or two comments i think or as a backdrop we see that retailers are cautious at your point daniel and also you know one example of that is that they are ordering smaller quantities more frequent and you know closer to season start so to speak and i would agree with you that that typically means that retailers who are cautious and focusing on cash plainly miss some sales opportunities i have to say i don't believe that it's really the case for tulip products we are you know we operate the supply chain which is i used to call it retailer like we are premium products premium prices but also premium service so we are and we have factories and warehouses close to our biggest market and customers so our customers are used to having deliveries on a sort of one to two day lead time and and i would be surprised if if they would quote product availability as an issue for them when it comes to tulip products

okay yeah now okay good just coming back also to product development spending and it's been very clear that it's going to be tilted towards the first half of this year but do you still want to sort of stick to your four-year guidance in terms of flat year a year or how do you see it

yes that's still the view

yeah and when it comes to the inventory drawdown that you've communicated of 200 million a quarter ago it seems like you've done 100 already in q1 is the coming 100 billion is going to be more evenly spread through the rest of the year so that also been going to be q h1 tilted

um yeah we expect um we expect that to be spread through through the rest of the year but i think we're we're pleased to see we're well on the way to the target in quarter one absolutely um okay we're confident of of hitting hitting hitting our target there

yeah good and just a couple of smaller questions uh sort of many of many of your peers have complained about the easter being early this year having a negative impact on on invoicing days basically um in q1 have you experienced the same or is it less relevant for you

no but we we of course have the same dynamics with invoicing days and other sort of more we should call it short-term effects that happen um but we are you know in 138 markets and many product categories etc and we try to focus on the bigger points um and for us you know the the drivers around bike and rv and new products are much more significant than than invoicing days but yes in principle that effect is for us also but not as material compared to the the bigger stuff

okay and just two short ones still i think you had a recall in the quarter or maybe the start of this quarter on child bike season without any any material impact and then secondly what's really left in terms of sales that are related to legacy say legacy bags

yeah so uh on yes we have a recall on on the child bike since you're correct i know you want to comment on the financial aspect of no

but it's not it's not uh it's not material on a on a group level but it's a voluntary recall in in chart boxes yeah yeah

uh and then on the second point daniel please could you repeat the question

now just sort of you commented upon it when it comes to packs bags and luggage and you have this legacy bag business which is structurally declining and been doing so for a very long time i just wonder where we are now in terms of how much how much revenue is coming out of that uh currently on a 12-month rolling basis yeah

no uh you're completely right it's uh gone down for for quite a while uh and it would probably surprise uh all of us on the call how many uh cd wallets and camera bags are still sold at least in the u.s market in some ends but but it is of course clearly smaller now and i don't want to give an exact guidance for you know when it will disappear but uh we we uh we are not as impacted of it as a company-wide perspective anymore but within the packs bags and luggage category specifically it's uh it's notable the decline

yeah thank you that's

all

for me thank you guys

thank you the next question on the line from adela daschen from jeffree please go ahead

good morning uh one question on the the dog transport products is it possible to to get them understanding of what the contribution was for that category during the quarter

morning uh well we don't give specific specific numbers for specific products but as you may have noted we gave the quarterly growth number for the product category juvenile and pet which had a good development of plus nine percent and that is uh of course due to several factors both for example strollers and and or products but uh i think more generally we could comment that sometimes we get questions focused on now you launched this product in this quarter you must have seen a great growth but of course when we enter new product categories it's a long-term development to get to where we want to be so it's clearly a contribution in the quarter but you know it's an order to reach where we want to be it's going to take to take time what is nice to see on the dog craze specifically the first number one product is uh it's been uh well received both from a design perspective as we talked about before with the design awards won some consumer tests already got good distribution we see some of the bigger pet stores in uh in europe are now you know introducing it to all of their stores and even replacing some competitive products so so it's a nice start

yeah that was actually going to be my question second question if it's fair to assume that the volume buildup here will be gradual and and if so if you have any kind of timeline on where you expect it to actually start to contribute more materially but it sounds that you're that's that's going to happen throughout the year

absolutely and then also over years and also a nice addition for for the dog transportation you know uh growth initiative is the second product which is coming now in quarter two with the dog bike transportation

yeah all right makes sense and then on on rv products that segment is continuing to face headwind um when when you're in dialogues with your customers and other market signals that you're seeing what's the i guess when should we expect an inspection point here is it fair to assume that already by the second half of the year the that segment will start to to post some positive growth or or is that too early

yeah so our view there has been the same now for a couple of quarters and it stays the same so if you look back and just give you the backdrop in history of course this has been the exposure to a cyclical uh segment and the last downturn so to speak lasted a bit more than two years and for a number of reasons we were expected to be about one year this time we started to see the decline in q3 and we've said for i think two quarters now that we do believe it's going to be challenging for the first half of this year but if things play out the way we believe they and hope they will we could be back to you know flat or maybe even a small positive during the second half of the year

okay that's all for me thank you

thank you as a reminder if you'd like to ask a question please press star four by one on your telephone keypad now our next question is from matt's list from kepler show row please go ahead

yeah hi good morning thank you uh well a couple of questions are first regarding well just to get the feel over there strategy behind the launch of the car seats here which markets you are sort of addressing first and what the segment i guess it's premium segment but if you could share some views there

absolutely so we are entering the first of all european market now in in youtube in about the month time

we're

coming with a base an infant product and a toddler product

that's

the segment we're addressing we're clearly positioned in the premium end of the market we believe we have and we have a lot of respect that there are there's some good competition in this segment but we believe we are coming with a very strong tool of product with you know easy to use well designed all of that but also really put safety in the center in a number of ways we will launch this product in europe gradually throughout the well start of quarter then the coming two quarters and we start in europe's biggest market germany and the reason for that is because it's the biggest market but also there is really good premium distribution in germany several retailers which are very focused i would say less on selling car seats and more on child safety and you know with us coming in on the premium end premium product we would like to also start with the premium distribution so that is the strategy

great thank you and then i i i mean i the bike rated products are recovering and that's of course imported for you and if you could share some views about the historical performance there i mean compared to during the pandemic etc is it the same do you see the same feel the same momentum or that's my question

so

i think i have to separate a little bit the market in general by credit price and for us specifically because i think we are in the premium end of the market and that the end of the market is doing better than in general but if you there was a really big boom during the pandemic during of bike related product and a really big decline and now of course we're meeting some of that lower numbers but we see volume and activity related to our premium end really picking up but still not to the level where we were you know pre pandemic

great and the same sort of question also i mean this first quarter is importing especially towards the end of the quarter there retail interest and so on is it a similar message there i mean you see a momentum but it's well maybe not at the same level as previous peaks

i'm sorry i lost you a little bit could you repeat the question please

yeah i mean the first quarter is an important quarter for you to selling in products towards the well selling season and retailer interest there i guess you share some some news there about the historical pattern are they sort of posting smaller orders or are they sort of more trying to to ask the xxl question previously trying to to restock somewhat this time

thank you now i heard the line was breaking up before but now it was clear thank you so much now i think we clearly see a cautious sort of behavior from retailers and a good example of that is you know smaller order quantities later orders closer to the closer to the sort of cease or expected season kick off and we see that behavior continuing so i think it's a tough consumer environment in in many ways and sectors and retailers are acting accordingly

okay thank you thank you very much

we have a follow-up question from daniel schmidt from danska bank please go ahead

hi matthias again just a follow-up from me i sort of i think you've touched upon it before actually maybe in connection with the q4 and the q3 report but given the level of new products that are coming out in the market this year which is a record amount and and you're also receiving all these awards is that a function of is this implicitly driving to the more towards sort of premiumization of the assortment you think is this changing the sort of the perception of the assortment a bit and you also talk about going very important to go with premium distribution in the german market and that's a good market to start with and so on from a european perspective or am i getting it wrong

no you thank you daniel you are getting it right but it's maybe a smaller shift or sort of than then you know it's not so dramatic i guess is what i'm saying we are clearly on the journey to you know drive more and more premium products but if you look at the market and sort of classify very simply any kind of product category into good better best products we would like to play in best and better and not good so to speak and we do have opportunities we feel in these days particularly where the premium consumer is a bit less negatively impacted probably by the environment to continue to play even stronger in the premium end of things we also want to be strong in the best sort of better so better and best but also to your point daniel when we launch something completely new when we come in with car seats or dog transportation you know we want to show our best foot put our best foot forward so to speak and it's important for us to come in at the right position in the market and i am in many ways more occupied by us getting you know a good start in the sense of a well received and the right place start then you know fantastic sales numbers for the first couple of months so so when it comes to new product categories we push that premium positioning extra to make sure we get a good start

yeah yeah but i think sort of you that's my feeling at least that that's that's a bit more accentuated than it has been before at and and a second question on d2c you launched check republic and you seem quite happy with the development i think you wrote that it's growing are are you sort of expecting and it's of course impossible to have a strong view i assume but given that you know a lot more about the product launch or the country launch program than i do are you expecting to have a sort of a fairly linear development of direct to consumer in percentage of sales for the group in in the coming sort of two years

yeah it's as you say that so many factors impacting that in terms of market launches and also different categories play you know differently in different channels etc but from a very big point of a very big picture kind of point of view yes is the answer there is no dramatic you know effort to boost d2c earlier or later etc so from a big picture yes

yeah okay thanks

that's all for me thank you

thank you our next question is from gustav from seb please go ahead

thanks operator thanks for taking my question and sort of relating to to price points and what not also i think a little bit more of a broader question if i look back at the covid years to the reported margins above 20 the target of 20 percent and and since then you have rolled out all these initiatives including d2c which i assume would be margin-equity if you have launched products that are more automated in the production higher price points i guess external price pressures must have come down a little bit since then but could you remind us what what were sort of the one-offs impacting the margins upwards during those years that might not necessarily come back when you reach those volume levels again that'd be helpful

hi gustav it's toby here but i could say one one big impact when when the sales were high during the pandemic peak was we had a significant leverage on sgna costs as well which which obviously drives margin improvement so i think that was that was one of the bigger factors and you get some of that effect also in in gross margin as well with the good production levels and and good throughput in the factories during that period so um the cost base is higher today than

back then

and

why is that

well the i mean the cost base in q1 we've talked about we we we see the impact of the new product launches uh coming through so um that's the biggest

the

biggest impact

i think it's important versus the

pandemic years is the cost base the fixed cost base materially higher now compared to then and to what extent does that limit your margin potential to come back to those levels

well to your point if you step back and look take a look at tulia you know they they're fixed we have a production capacity we of course have continued to invest in automation which we are not at all leveraging to the full utilization that we did previously when volumes are picking up but not there right and then our sgna is to you know a large extent uh product development spend we're almost seven percent of our sales last year uh on on product development and we could

we

could decide to stop that if we wanted to it's sort of more discrete but we are continuing to invest and all of this as you are talking about percentages of sales are of course also relation to you know the sales that we drive with our own initiatives but the market environment and i think we are remain of the view that we are still in a tougher market environment and definitely compared to the demand boost we saw during the pandemic

okay and a second question on pricing did i recall it correctly that you didn't do any broad sort of the usual one one to two percent price increases outside of bags for the start of this year and if you can discuss a little bit why that decision was made and if you expect sort of the historical pattern of price increases with the start of the year to come back now into the next season or if that pattern has changed somehow absolutely

you're right if you look back in history uh the most categories where we're in or generally speaking the industry is on an annual price increase cycle which is jan one this year we chose to do flat prices for existing products for for a number of reasons of course we talked about it on this call also retailers are in a tough spot and would prefer the prices went down and the input factors with salaries etc are coming up but but for us it was a very straight and clear message that we're keeping existing product at same prices broadly speaking since we're also launching so many new products this year and of course on the premiumization topic new products new generations of best sellers are at a higher price point than the previous ones so net net all things considered there is an average net net price increase in 2024 and then we expect to get back to sort of industry normal cycles in the years ahead to your point kristof

but just a final follow-up on that do you feel that the gap between tulen alternatives for consumer in terms of price spread it apart too much during covid is that a problem at all or do you feel comfortable in general with the price gap versus

alternatives it's very varying by by category and sometimes by country but i would say in general we are in a good spot where we have premium competition i think we are you know in a similar relative comparison that we were before we do have opportunities to address more of the what i call better products in good better best or mid segment if you like in some in some product categories so there we think you know at a lower price point than our some of the parts we have today we could still gain some some clear volume and some sales

okay perfect thanks for taking those questions

as a final reminder for any further questions please press star one on your telephone keypad now and we will be happy to answer any questions you may have it appears we have no further questions so i'd like to hand back to matthias for closing remarks

well thank you everybody for joining this call thank you operator wish you all a good day and look forward to speaking to you again at the q2 conference call