Thule Group AB (publ)

Good morning, everyone, and welcome to the Thule Group Interim Report Q2. During the presentation, you can register to ask a question by pressing 1 on your telephone keypad. I am now going to hand over to your host, Matthias Ankerberg, CEO, to begin. Matthias, please go ahead.

Thank you very much and welcome everybody to this Q2 call. I am as previously joined by our CFO Toby Lawton and we'll get going straight away. Overall, second quarter was a quarter with a good financial result despite us making big investments for future growth. We saw some sales growth in the quarter, strong profitability and importantly have now launched A lot of products, but also two new product categories this first half year. So covering some of the highlights and speaking to the presentation material available. Financials first. Sales is up 2%. FX adjusted versus previous year and fairly the same across the geographies. We will talk about the product categories in more detail in a minute. We continue to see a tough market out there in general and in particular in some specific areas. And we also continue to see good growth from new TULU products and from bike-related products. We have a gross margin which increased to an all-time high in the quarter, 44.2%, which we're, of course, pleased to see. And that helps us to deliver an EBIT margin which is in line with last year, despite us making investments and therefore higher costs in sgna to drive product launches and new product categories strong cash flow uh again in also in q2 uh and uh helped by ebit of course but also continued inventory reduction and on track to meet our target of reducing inventory by 200 million sec by year end quite a few highlights in this quarter um car seats has been a initiative long in the making, now launched in the first European markets. We've got another recognition for our design team, which we're really proud about. We have a minor acquisition that happened actually in early July, so after Q2. And we've also put a new refinancing package in place during Q2. We'll come back to all of these points. But before we do that, on the next page... We'll take a bit of a bigger picture view. Of course, this is a quarterly update, but as you know, we are to take a long-term view of driving the business and it's therefore nice to reflect on the long-term development at least once in a while. Long-term, we have driven profitable growth for many years and it's nice to see now that after sort of the COVID ups and downs, that this year we are back to profitable organic growth again. On the last 12-month basis, we have a net sales of net 9.4 billion Swedish, an EBIT of 1.6 billion and an EBIT margin of 16.6%. With that long-term perspective commented on, we can turn to keeping the finger on the pulse on the quarterly performance. And on page four, as you know, we are a very product-driven company, so I'll speak to the development per product category. And we have four main product categories starting with sport and cargo carriers in the quarter it increased very modestly with one percent sales we do see continued growth from bike related products premium bike related products specifically and since almost a year now bike retail inventory of tulip products have been at a healthy level in europe and getting there in north america In the quarter, we do meet some strong numbers from some good product launches, particularly Thule Epos that was launched in Q2 last year. But overall, there's still a good growth in bike-related products for us in Q2. We've also launched a new generation or an updated version of the world's most sold rooftop box Thule Motion, Thule Motion 3, which has been really well received by the market. We're pleased about that. We do see a continued tough market overall in this segment, and the with cautious consumers and retailers, and particularly in North America, where we, outside bike-related products, see a decline in the business in the quarter. Packs, bags, and luggage stood out in the quarter as the fastest-growing product area, with 5%-plus FX adjusted for us. And even faster is the two branded products, which grow strongly again in Q2. actually even more than in Q1 due to the fact that we now have more product launches in the market this year. So we've updated the best-selling luggage collection we have, Thule Subterra. We've updated the duffel bag collection, Thule Chasm, really drives good growth for us. In general, we see growth in bike-related and also travel-related bags products. But this is also, as previously, partly offset by travel. us continuing to exit some legacy product categories, non-Tula branded products in this area. On the next page, two more product categories. We see good growth also in Juvenile and Pet. And again, it's the new Tula products that drive the growth. We've had a very successful introduction of our upgraded best-selling stroller, our all-terrain stroller Tula Urban Glide 3. which has continued to deliver strong growth for us throughout the quarter, I should say. Very positive. We have, as you probably know, the first full quarter with a dog transportation product, the Dog Crate Tool Alex, which of course helps. And then, which I think is a sign of the market characteristics at the moment, we have seen a bit slower sales of multi-sport and bike trailers as retailers have been cautious with managing inventory ahead of the launch of the next generation product, which was introduced to the market just at the very end of June. So that, I think, is an interesting sign of how retailers are cautious unless there is news in the market. Car seats also, of course, help. So the volumes are very small in the first quarter. First products were introduced in the first markets end of May. And I will come back to that. RV products has been in decline for several quarters and the RV industry continues to go through a challenging period. Net sales increased less in Q2, only 1% negative, which of course is nice to see. It's really a mixed picture in the quarter where we do see a decline now in sales to OE customers or manufacturers, vehicle outfitters. But nice to see this partly being offset by a return to growth in the sales to the aftermarket channel or the dealers in the quarter. Then I'd like to cover some of the highlights a bit more specifically. And we can start with car seats on page six. And car seats is a much awaited launch with several years in the making. And now we are live. We launched in three countries. and german-speaking countries in in europe germany austria and switzerland at the end of may with three products a base an infant seat and a toddler seat and we are really proud of the products innovative products safety in focus easy to use uh to the design language and and really putting safety in in front left front and center so to speak with uh Our approach also being making sure that it should be easy for the consumer or the user to make sure the product is installed correctly and safe to use. We have got good reception from the industry and from our premium retail partners. We have got good placement with key retailers, premium retailers in these countries. We've had a positive reception from media and we have got no less than six product design awards from IfDesign and RedDot. even before launching the price in the market. So it's a nice start for us. And now the long-term work to build market positions in this category has started. We will continue to roll out these products to more European markets throughout the half year two of this year. Two countries in Q3, but most countries commence sales in Q4. And then we of course have more products in the making, both for the European markets and also for North America. I also wanted to highlight another recognition for our design team. We were named the Red Dot Design Team of the Year in 2024. You may remember that the last quarter, the previous quarterly update in Q1, we were proud to see more product design awards than ever before. 23 design awards from a combination of F-Design and Red Dot with both being awarded for upgrade versions of our best sellers, some new innovations and products in our new categories. And now we also during Q2 got the award Red Dot Design Team of the Year or Best of the Best, as it's sometimes called. And it's really nice to see, really proud of the team. You can't apply for this award. It's really something which is awarded through an independent jury. And nice to see the Thule design team being mentioned in the same sort of category as Sony or Apple or Philips as some of the earlier winners. So proud of the team. One more highlight from me before handing over to Toby for some financials. We have done a small or a minor acquisition in the beginning of July and thereby entering the category for water sport and cargo bike trailers. A German company called Recha. It's a small business, but it's an interesting niche category of water sport and cargo bike trailers, which is a emerging and fast growing in Europe and basically in its sort of infancy in North America. Often we find that I mean we're a very product oriented company and want to have the best products in the categories where we operate and we often find that in these new categories the best products are often done by real enthusiasts and in this case it's the inventor with a passion to surf and needed to find a solution to transport his surfboards to the french atlantic coast when he was surfing and invented this product and has developed it over over time and it's really a high quality bike trailers for this kind of of products and holds a strong market position in this little niche in europe so we will integrate this business fully into tool operations it will be A Tula product, it will be Tula branded and it will be distributed and manufactured throughout sort of Tula channels. And it's small, but quickly provides a starting point for us to continue to grow in this niche. Good fit with our existing portfolio. And with that, I will hand over to Toby to cover some financials in more detail.

Thank you, Mattias. And good morning, everybody. And we can turn to slide nine on the income statement. And here you see the income statement is by quarter for both 2023 and also the first half of 2024. And focus here on the quarterly development, which is the recent news. And we had sales in the second quarter of 3.1 billion SEC, which was a growth, as Matthias has said, of 2% versus last year. You can see then the gross margin here. Here was strong, and it's an all-time high at 44.4% in the second quarter. That's close to 1% up versus Q2 last year. And the driving factors here are favorable product mix and lower material costs, driving the improvement in gross margin. When it comes to the EBIT margin, it's more or less flat. It's 23.6% for Q2. quarter two this year, and it was 23.5% in quarter two last year. And this is, of course, helped by the higher gross margin. But the selling and administration expenses include investments to support the new product launches, which means we end up with a flat EBIT margin for the quarter. Absolute profit then is 732 million of operating income versus 711 million last year. So profit EBIT is up as well. When it comes to the net interest expense and effective tax rate, I say they're both stable. You can bear in mind that last year there was a one-off positive in the net interest expense related to foreign exchange, but otherwise it's very stable in terms of net interest expense and effective tax rate, which is slightly better this year than last year, all in all resulting in a net income for the quarter of £559 million or net income for the first half year of £858 million. With that, I can click on to the next slide, slide 10. And here you see a bar chart showing the sales by quarter. And first of all, I think you can see from this chart that we are, of course, a seasonal business and the second quarter is the largest quarter. So you should bear that in mind that our business is strongest in the second quarter. You can then see from Sales growth, I think you can then see also from this graph, which shows the development since 2019, and it's important to bear in mind that 2019 was the last year before the pandemic, and we had some large swings during the pandemic and just after the pandemic. We keep track of that on this slide. When it comes to sales growth for the second quarter, as we've mentioned, sales growth was 2% versus 2023. And we had 8% sales growth in the first quarter. But when you look versus the pre-pandemic, before these swings, Q2 is actually slightly better versus 2019 than Q1 and is also more in line with the peak pre-pandemic years. So I think it's important to just bear that in mind when looking at the sales development. If we look specifically at the second quarter, what's driving the growth in the second quarter is bike-related and new products driving the growth. And then on the other hand, it's RV where we have a decline, but it's less of a decline than we had in the first quarter. All right. With that, I can flick on to slide 11. And finally, one slide on the cash flow. And we continue to have strong cash flow generation in Tudor. And that's driving a deleveraging of the balance sheet. So it's very good to see. And we delivered in the first half year, 819 million on the bottom right here of both cash flow from operations, but after deducting the investments. So good cash flow generation. Then this is driven also by a good performance on working capital. And we had a good reduction in working capital in the second quarter, which is really driven by a reduction in inventories. And we have an inventory reduction target for the year of 200 million. And we're, as I say here, we're on track for that target. We're actually overshooting that target in the second quarter. But you should bear in mind that inventories do normally go up in the fourth quarter due to seasonality. When it comes to the net debt, we are now at a net debt of 1.753 billion SEC versus 2 billion at the end of last year. There's some 250 million lower net debt, and that's driven, we've got the positive cash flow, which more than funds the dividend payment, which was also made in the second quarter here. So that leads to a deleveraging, and our net debt to EBITDA has now come down to 1.0 times EBITDA when measured on a last 12 months basis. And then a final point here to mention that we've refinanced during this quarter. And that refinancing has basically extended the maturity of our funding. And the refinancing consists of an RCF, a revolving credit facility of 320 million euros and a term loan, bilateral term loan of 80 million euros. And these new funding basically extends our maturity, but also has diversified our maturity profile. So we have a maturity spread between three, four and five years. And we're very pleased to see that our banks have given us good support and really want to continue to support Tula's growth journey. So happy to see that. And with that, I will hand back to Mattias.