Thule Group AB (publ)

Good morning everyone and welcome to today's two-led group interim report Q3 July to September 2024. My name is Drew and I'll be your operator today. During today's call there will be a Q&A session. To register a question please press star followed by one on your telephone keypad and if you wish to withdraw your question then it's star followed by two. I'll now turn the call over to Matthias Ankerberg from CEO and President to begin. Please go ahead.

Thank you very much and welcome everybody to this quarterly call. I am also joined here as usual with Toby Norton our CFO and we will speak to the presentation also available on our website. I'll start off on page two. The third quarter of the year is a good quarter for us despite the tough consumer market. We grow by 4% organically in the year, more in region Europe and the rest of the world, 6% and 1% in America. We'll get back to market conditions but we continue to see a better market in Europe than in North America and we continue to see the growth coming from new tool products driving growth even though the market is tough and also from bike related products where the market is better. We have a strong gross margin of close to 43% in the quarter and we have an EBIT margin of .6% which is the highest ever EBIT margin for a third quarter for Tula Group excluding the pandemic period years and the total EBIT in absolute terms was 413 million and Toby will get back to that as well. Cash flow remains strong as for the last couple of quarters and we have cash flow from operations of almost a billion Swedish kronor in the quarter. A couple of highlights for the quarter and the first one is actually after the quarter finished. Yesterday the semi-annual consumer test results from Europe's most important car seat test was announced and Tula was the winner in the so-called ADAC car seat consumer test. That's the big one in Europe so we are very pleased and proud to win that. We have also continued to launch products in our second new category for the year dog transportation so we launched Tula Bexie and we also continue to grow our DTC business and have so far now opened six new countries for trading with on Tula.com with two more opened in the third quarter. On the next slide page three we'll summarize the long-term development for Tula Group and for those of you who know us well, you know we've had a good profitable growth for many years. The graph shows the development since the IPO in 2014 and following two years with sales declined after the pandemic peak we are now very continue to see another quarter adding to growth in 2024. Good to see that this year is back to good profitable organic growth on a 12-month basis. Net sales is 9.4 billion for the group, 1.6 billion of EBIT and an EBIT margin of 17.1 percent. Turning to page four and going a little bit deeper into the trading in the quarter by category we can see that several of the trends we've been seeing for the year continued in the third quarter with some nuances and some updates also related to us launching new products. So starting with our biggest product category sporting cargo carriers the category grew by five percent currency adjusted in the quarter, six percent -to-date and we continue to see that bike related drives the growth. Particularly we see premium bike related products doing really well. We have launched two new products in the quarter, one niche product which is shown on the picture which is a so-called vertical hanging bike carrier mainly for the Americas market which has done well and we've sold everything we've been able to produce so far. We continue to see very good sales of our most premium bike carrier tool, Apos, that was launched last year and we've also at the end of quarter upgraded our best-selling tool easy fold bike carrier which also has a really nice start. So good growth in the premium bike related products. Overall the market for sporting cargo carriers continues to be tough with both cautious consumers and retailers, more so in North America than in Europe but also in Europe but we as we've seen now for several quarters do see a more healthy inventory levels in the bike sector particularly around premium products and particularly in Europe which helps us. Packs, bags and luggage declined by four percent in the quarter and one percent for the year so far. We continue to see good growth in Tula branded luggage and duffels for example the updates we've done this year to the Tula Aeon and Tula Sampterra products and we also continue to see good growth in bike related bags products but we also as previous quarters see decline in legacy products as the exit of those categories continues. If we move forward to page five we will cover the last two product categories. The strongest growth in any product category in the quarter was in juvenile and pet which were net sales increased by 15 percent to 9 percent for the year and this is the category we've had a lot of newness this year. We in the quarter launched an updated generation of our multi-sport and bike trailer Tula Chariot which has been really well received by the market and the consumers and driven very nice sales growth for us in the quarter. We did a big update to our new generation Tula Urban Glide 3 during earlier part of the year which continues to perform really well and we see good growth in strollers also in the third quarter. Dog transportation is a new category for the year. We continue to see good performance of the dog crate Tula Alex and continue to take market share and we also launched Tula Bexie our first bike trailer for dog transportation in the quarter which also added new sales and last but not least we have entered into car seats. We moved into three markets Germany, Austria, Switzerland at the end of May and then added Belgium and Netherlands and Luxembourg in September which also of course adds new sales in this category. So a lot of newness and 15 percent sales growth in juvenile and pet in the quarter which we are pleased about. RV Products is a mixed pitcher. Net sales in total were flat compared to last year in RV Products and it's down two percent -to-date so far. As we've talked about several quarters earlier the RV industry is going through a weaker period and we do see two opposite trends in the quarter where we see a decline in sales to OE customers, manufacturers and vehicle outfitters but that sales decline is offset by return to growth in the dealer channel, the channel that is closer to the consumers so overall resulting in a flat development. Particularly we also see in this RV category that the growth is mainly coming from bike-related products in the aftermarket channel. So I'd like to then on page five, sorry six, give you a bit of a further update on the car seats launch and firstly just to let you know where we are. We have continued the launch with the first products was in the market in May and we'll continue the launch in the third quarter and will continue in the fourth quarter. So before stepping into the timeline maybe just to remind everybody that we are a product oriented company. Our primary focus is to deliver a great product up to the standard and we do feel we have launched innovative products in a fairly established product category. We clearly focus on safety, we clearly focus on ease to use and we also think at least by in our view that we have produced a product which is well designed. So overall three products launched to the market end of May, a base, an infant seat and a toddler seat in Germany, Austria and Switzerland. Good reception, six international products, design awards even before the product was launched and then the rollout continued with opening up Belgium, Netherlands and Luxembourg during September 2024. We've had just as in the German speaking markets nice reception, we've had good placement with the most important premium retail partners that we are looking to enter with but good positive receptions with PR both more juvenile focused media but also broad media and also with ambassadors. The rollout will continue across European markets and a few others connected to the European standard so over 20 countries now in November 2024 and it's nice to see the good start and the good reception and now the long-term work to build these market positions will continue. That's the last comment also say that we do have more products in the pipeline both for the European and the North American markets and we will in 2025 launch our first high back booster seats for children of a little bit higher age. On the following page, page eight, I'll also take the opportunity to update you on the outcome of the so-called ADAC test, the most recognized car seat consumer test in Europe and probably the world which was announced yesterday and this is the big one and we are very proud to say that Thule came out as the the winner in the test. The test is based on three areas, its safety, its ease of use and its ergonomics and the products are scored on a scale from one to six, one being the best and Thule received a 1.6 score for the combination of the Thule Maple and the Thule Alfie, the infant of the base bundle. This is the the best score of any product tested in this October 2022 test which of course makes us the winner but it's also the best score of any product ever tested of this product type. We are really proud of the team, I think it's a great testament to the product development capabilities of Thule Group and I think it's a milestone for us in the car seats category and as a brand. So a good start and a good recognition for the car seats early on. And with that I hand over to Toby to cover financials in a bit more detail.

Thank you Mattias, good morning everybody and we can turn to the income statement slide eight and I'll start off showing you here the revenue in quarter three, we had a revenue of 2.344 billion SEC in the quarter which was an organic growth or an FX adjusted growth of four percent which means our -to-date FX adjusted organic growth is also at four percent. Moving down the table to the gross margin, you can see we had a gross margin in the quarter of 42.9 percent, this is 2.8 percent up versus last year. The positive trend in gross profit continues, we have effects from lower material costs which is the biggest impact, also some better mix which is driven by the new product launches in premium price points which Mattias has talked about and also some better overhead absorption from better production levels this year. If you move down then to the EBIT margin, you can see the EBIT margin in Q3 improved by 2.1 percent versus last year and this is driven by the higher gross margin. Finally, just on the right hand side you can see for the -to-date numbers if I move to the -to-date column, net interest expense was 59 million so far this year, tax is 339 million which is an effective tax rate of 22.6 percent, so very stable effective tax rate and then net income -to-date for the year is now 1.159 sec, so well over a billion sec in net income so far this year. If I flick on to the next slide, slide nine, sales by quarter and the first thing to point out here is you see the seasonality of the Tula business, you can see quarter two is actually our biggest quarter, so quarter three which we're reporting now is the tail end of the season and I can also point out obviously that Q4 coming quarter is clearly the smallest quarter of the year and it's the summer season in the northern hemisphere of course which drives this for us and if we look at the growth rates for quarter three you can see in the box on the right that the reported currency growth was 1 percent but FX adjusted its 4 percent in the quarter, so 4 percent organic growth again and versus 2019 which is the pre-pandemic period then it's a 30 percent growth. If I move on then to the cash flow, slide 10 and here you can see that we had clearly a strong cash flow generation in the quarter, if you see the line cash flow from operations in the quarter we had 955 million sec in cash generation and this was driven by reduction in accounts receivables and inventory and we continue to have a positive trend on reducing inventory this year and we expect to beat our target that we've communicated of 200 million sec inventory reduction for the year. On the right hand side you can see the -to-date numbers as well and so far the capex this year, just to point out the capex below cash flow from operations is 183 million so far this year which means when you sum those up a free cash flow from the operations is 1.741 billion is what we've generated from the operations this year after capex and all this has of course a strong deleveraging effect on our balance sheet so the debt to EBITDA ratio at the end of quarter three 2024 has been further reduced and is now down to 0.5 times debt is 0.5 times the last 12 months EBITDA. So with that I will hand back to Mattias. Thank you Tobi. On

page 11 I want to summarize the product launch year in 2024 as you probably are aware this is the most intense product launch year we have ever had and we have done several launches of three different types. Firstly we have upgraded several versions of our existing best-selling product and that's an area that gives quick sales effect and it delivers good growth for us and it creates newness in the market of course in the quarter to be given example we have launched the new generation of to the chariot our best child bike trailer of course in our view the market's best multi-sport and bike trailer and which has done really well for us in the third quarter we've also launched some new innovations in existing categories we have launched to the outset the worst first tobar mounted tent in q2 the world's first removable awning to the side hill in this quarter q3 and as I mentioned earlier to the revert the vertical hanging bike carrier that is actually self-assisting loading and unloading of bags although you can have six bikes sorry of backs on top on the back of the car so new innovations in existing categories also drives newness and sales of course and then thirdly we have launched the two new categories in 2024 and as mentioned earlier to the bexy the dog bike trailer has been launched now in q3 to complement to the alex the dog crate for cars that we are launched in q1 so we've talked a lot about new product launches and it is an important learning for this year that newness really drives growth even though the market is tough and we will get back at the fourth quarter conference call with the plans for 2025 but given the strong reception of newness in 2024 we will of course keep a high pace also in 2025 on page 12 I would like to take the opportunity to talk a little bit more about updating our best sellers we give a lot of attention and rightfully so to the new product categories but we also see some really nice benefits from upgrading some of the existing products and as an example we launched an upgraded version of truly easy fold now generation three at the end of the third quarter it is the world's most sold bike carrier and it just got better to the standard we always strive to strive to deliver the best product for the market and always improve and this new generation has an intuitive click in click out bike arm makes it easier to one-handed load it on and unload bikes it can easily with an add-on and also has a larger wheelbase that accommodates larger bikes and also larger e-bikes as you may be aware we're also designing with sustainability in mind and this is another great example where we've had good success in achieving our targets so the new generation truly easy fold product has about a 50 lower co2 emission versus the previous generation it uses less aluminum the aluminum it does use is largely had hydropower produced and we also increased the share of recycled plastics as part of the plastics used so well done to the development team also on that end it is available through selected channels this year and then more widely next year as we ramp up production volumes and the price is about 100 euros above the previous generation product so good example of how we drive newness upgrade the portfolio add new features and driving more premium price point and premium portfolio in our product through our product development so summarizing on page 13 we had a good quarter in a tough market in the third quarter as we talked about already as we look forward both to the market and to our own priorities a couple comments from us on the market side first we expect the market's trends largely to continue so generally a continued tough market particularly north america and particularly around the rv and even more specifically the oe or the manufacturer side of the rv business we do see a better market situation in europe in general and particularly for bike related products which we also expect to continue and we do importantly also clearly see the new to the products drive growth and we can of course expect that to continue as well so some nuances but largely continuation of the market trends we are experiencing at the moment our own agenda stays the same we are very focused on delivering the priorities that we set out for this year 2024 and they are four which we have updated you on throughout the year so far more product development is number one more launches than ever talked about that already making sure we get a good start to the new categories dog transportation and car seats talk about being more visible for the consumer and driving growth also through actions on that end showing more to sell more and continue to to grow on dtc and also to improve further the efficiency in our supply chain discontinuing some external warehouse services and reducing inventory levels and lastly as we now move into the fourth quarter the high season is is completed to toby mentioned but we do have a quite exciting fourth quarter ahead of us we move into this quarter now with two new product categories where we have started to take market share six new to the dot com markets on on g2c continue to add growth we have a record number of international design awards and just won the most recognized car seat award which of course gives positive energy for us at tulia and we have importantly an intense period to launch car seats in over 20 countries in november so very exciting final quarter awaits as we as we wrap up the year so with that we turn to operator to take questions and answers

thank you matias we will now start today's q a session if you would like to ask a question please press star followed by one on your telephone keypad and if you wish to withdraw question then it is staff followed by two our first question today comes from danish smith from dank's bank your line is now open please go ahead

yes good morning um matias and so before you hope you can hear me uh maybe starting off with wait what you finished saying matias when it comes to a quite exciting new q4 although it's the smallest quarter and referring of course to the car seat launch in the rest of the eu as i understand it also i guess the uk and norway and could you tell us so far what you've seen and experienced you had the duck launch in may you've had the benelux launch in september and i know that you were quite sort of deliberately cautious when it came to launching duck singling out a couple of sort of premium retailers and being sort of very strict about sort of getting it right and so on and how's that been developing as you get into the latter part of this year

hi daniel thank you yeah i can start until you may add i think a couple of points daniel to to your question firstly of course we're pleased to see you know the reception overall with the awards the test winners and and to your point also that we got very good placements with the most important sort of premium retailers that's one we've been really focused on getting getting a good start and getting that premium positioning right rather than going for volume as you're aware secondly on sort of volumes themselves they are as we have expected we have had a good volumes in the first couple of months we've had a good sell in and the start in in belgium and netherlands that's good too of course q4 with more markets is going to add volumes to that i mean the dash and the benelux are big markets but more than 20 new ones will of course add volumes too and then maybe last point is you are completely right we are doing this to get a great start rather than to get you know massive volume from the get-go we want to make sure we get the both the start and the positioning right but also just as a reminder we are producing these products ourselves in our own factories and we want to make sure we get this production of high quality with good efficiency and and trim trim all the sort of production lines and teams in so there is a limitation to how much both can and will produce for the first couple of months as we ramp this up but overall we are very pleased with the start and yeah really excited to launch in q4 and very excited about 2025 when we have things more up and running so to speak

okay and and the fact that you won this very prestigious test yesterday i think it refers to german markets which is of course probably the biggest market in europe is that going to be a sort of a major um major push for you guys in the market when it comes to marketing your product in continental europe especially germany is this adding a lot you think or is it sort of very good to have and gradually it will be something that consumers will recognize or is it recognized immediately

yeah so you know this is the big one if there's one you want to win it's this it's recognized immediately across the german german market if you would do a little bit of media run through yesterday of all the major german newspapers you'll probably find an article around this it's also very quickly picked up in the industry among premium retailers and among sort of ambassadors in this space it has carryover into other countries as well we see it internally already in the nordics and in the uk how sort of the bus is building so it is is very very good now of course there's absolutely no guarantee that you know the sales numbers are a direct consequence of the consumer reward but this is a great help and a great start i mean it's it have to remind all of ourselves this is the first product we launched and we won already so it's a it's a really good positive vibe for us that you know this this win

yeah over clearly but just connecting that maybe then to the inventory levels which are down a lot more than than what you have aimed for and of course i appreciate that it swings a bit depending on what court you're in but currently we're at around close to 700 million inventories being down versus the end of last year and i guess you have some effects in that and you have some raw material in that but also on an underlying basis it's a lot more down than i guess you anticipated and with this launch that you have now in the rest of europe and of course it's only one product but it's it's a fairly big and it's something you produce yourself what's sort of reasonable where should we end up when we close the year in terms of inventories

yeah hi daniel i can i can take this toby toby here but yeah we are ahead of our expectations when it comes to inventory reduction it's been a really good job by the by the by the team in reducing inventory it's it's it's you could say it's driven by good work in terms of in terms of optimizing inventory levels and also working through older inventory to to reduce the aging of inventory so it's definitely a clearly positive positive effect from from the hard work put in i think you could also say it's you know it it is a tougher market than we you know we we hoped for you could say so if if it was strong market growth we you know we we we and a bigger growth rate we would have had to build inventory a bit more so so so we you could say our in managing our expectations we we um yeah we we didn't we didn't expect this kind of level of reduction but it's um no it's clearly a clearly positive effect but i would say you have to bear in mind as well in q4 we normally build up inventory so i think we're we're at the low point now for sure in terms of inventory so it will go up a bit in now but not um not yeah we'll still be well ahead of our target

okay you did well of course in this quarter no doubt about it compared to many others but one area which is of course a concern in the market is the rv business when it comes to the oem side and i think you did well in this quarter keeping it flat with the help of the aftermarket if you look into q4 could you update us or remind us of sort of the share of sales that normally goes to the rv segment in the q4 and on that sort of is that the same split as usual when it comes to oe versus aftermarket and how how did that develop in q4 last year if you just want to remind us on that

um yeah so then i can start and then tobi can add i think um you're right about the the trends and it's a quick reminder we are mainly in we are almost exclusively in the european rv business i think it's good to keep in mind we did say at the previous quarter's uh call that we did see some positive signs in the aftermarket or sort of dealer wholesaler side but starting to see tougher signs on oe and that's exactly what we've seen in q3 with some of the major oe rv oe players decreasing production through various ways of doing it with a clear decline in therefore our short sales to to that channel of course but a good growth in in the aftermarket business where and you know a consumer pickup in in terms of vehicles sold out as well probably industries pushing a little bit but still good to see that that that growth and as a side comment there is also the the world's biggest rv fair in in germany in dusseldorf at the end of august which had the same record high attendance uh as it had last year so the interest seemed to be remain quite high on the consumer side so on the fourth quarter rv is it's a small quarter for us total rv is a higher share of the quarter in general and part of why it is a higher share is that the oe is typically producing sort of more flat volumes across the year that compared to our seasonal business around bike which is more spring and summer so typically that this a higher share of rv and a higher share of rv oe in the fourth quarter which we expect to be tough for a while longer

maybe i could just add there but we the oe manufacturers i mean they they think they took downtime in the summer which we talked about which we've seen the effect of and they're also talking about um also downtime during quarter four and around around the year end break christmas break as well so so it's um yeah it's it's it's clear that their volumes are going to be a bit lower and yeah in q4 as well

yeah but we already saw that also in q3 with longer production stops than normal but that also is going to come back in q4

yeah

um is it going to be tougher to neutralize that in fact with the aftermarket in q4 than it was in q3 yes there any reason like given that what matthias said there in terms of more even production throughout the year and rv being a little bit bigger part of q4 than it is in the other quarters

yeah it's a higher share maybe not

in

versus q3 at least yeah it's a higher share so mathematically that that's that's correct daniel but i think one of the one of the many beauties of this company is that we are in several product categories and and several regions so you know we we will work of course long term to develop each category as best we can but that specific space as we also commented on you know we do see the toughest situations in in all of our footprint within north america and in rv oe and as i said previously we we don't expect that to change in the short term

well thank

you

so we will now take our next question from gustav sagun from equity partners your line is now open please go ahead hi

i guess that's me just i guess with sdb thanks for taking my question um i'm looking at the the results here quite amazing that you're you achieve 15 evit growth on basically flat top line and it relates obviously to the gross margin improvement because sales and admin is up six percent so on a 12 month rolling basis gross margins are now 41.4 percent if i did my calculations rate so basically back to the peak of where they were in in 21 obviously back then you had almost 24 evit margins on the roll rolling 12 month basis at some point in 2017 so can you comment a bit on on the first of all the the higher selling and admin costs here in the quarter year of the year does the tool that we know today would hide to see higher price products in the mix more categories demand higher opex compared to previously and the development going forward now that you actually started to launch these new products will they start to face down that'd be interesting to hear and also the gross margin go forward given that i guess you under absorbed a bit here again now given inventory reductions would be instinct here thanks hi

guys maybe i can start on i mean the gross margin point i mean

you're

right on a rolling 12 month basis we're now back up at you know the high point and and you know so the the development has been good the last 12 months on gross margin you know did swing a lot during during the pandemic but we see you know we we do see that we we now you know have growth in the new categories which is driving driving premium price points but we also get the benefits of of lower material cost you could say during the pandemic there were big swings in material costs but that situation has stabilized a lot now and we're getting the benefits of the the lower material cost trend for the last 12 months coming through into into production costs as well i would say our production volumes are still not where they were in the pandemic because it was still very high production then but we're you know the the trend is successively improving as we as we yeah as we grow so so it's yeah absolutely it's a it's back up to where it was during the during the pandemic and then maybe i hand it with yeah absolutely yeah

no honest gna to to your point gustav you know it's higher than in previous periods and there are i mean i guess one or two maybe reasons for that but it's all related to investing in growth we are been investing heavily in in develop product development for a long time but particularly higher level the last two years around there as we're now in but entering more categories and you know have now launched car seats which is a sell themselves so to speak when you want to build up a new category with car seats in so far six markets and another 20 as an example of course activating that product means getting pr events in store presence etc so there's a sales and marketing cost associated with launches as well it's a fact that launching something in an existing product category where you have an established distribution and brand brand awareness etc is more cost efficient than moving into new categories so the consequence or i should say maybe rather the what you see in the numbers is a consequence of us entering new product categories and investing for for future growth in the existing categories but again particularly related to to the new categories

Thanks and and the levers or the the bridge going into next year on OPEX where do you see in terms of launching costs will they be coming up next year year over year given that you have entered more markets year over year or are we at the peak now and i guess a more hypothetical question where do you think you need to be in terms of gross margins to reach your financial target and targets in a few years

time well um see if i can answer that in a structured way i think you know that the most important driver of us reaching the financial targets is sales growth um i think we've seen that throughout this year but also throughout you know truly history that we do get good operational leverage on sales growth now in the short term of course we have to invest in new launches and and building up new categories to get that sales growth off the ground so to speak and you know obviously one one of the other good things about Thule is that it's quite a lot of these decisions are discretionary we could reduce development spend and reduce the sales and marketing investments if we wanted to so we can manage this actively which is good obviously there's been some i shouldn't say one of that's the wrong word but there's been some initial costs of getting to market with some of these new categories that that you know won't repeat in again next year so the decision is really up to us around how much to continue to invest for growth versus you know focus on profitability for the next year and we'll get back to you by q4 about our view about the launch calendar for 2025 but that's just an overall comment you know it's clear that newness drives growth also in this market and as commented on earlier we don't see a major positive shift in market trends in the short term so we will continue to invest for growth and we will continue to sort of keep our foot on the gas pedal so to speak so it's i know it's not the quantitative answer Gustav but that's the directions how we're thinking about this and we are really focused on on getting to that 20 billion SEC 2030 and 20 percent EBIT margin and the key to do that is to have good sustainable sales growth in many areas

i appreciate that just one final nitty-gritty sorry for sticking with the growth or with the margin discussion but since you took down inventory in the quarter i appreciate you also right that that you had lower costs related to having lower inventory so less costs for external warehousing and so forth but but can you quantify a bit what was the impact to gross margins from under absorption versus lower cost for inventory and how should that play out if you produce in line with sales into next year what will the delta be on gross margins next year that thing that's my final question

but i would say we we the reduction of inventory drives cost reduction as well in in terms of warehousing in particular and that so that is a cost benefit that we have but that comes that's that's shown in in sgna primarily in in in gross profit it's it's basically the yeah the the transport in and out the customer but but in the warehousing cost reduction is not is not an impact in gross margin basically and that should stay next year and that under absorption effects i'll just say we've reduced just sorry on the first part just we've reduced the warehousing and that that the warehousing capacity and warehousing cost in following the inventory reduction that that impact will hold on to going forward as well i'm sorry gustav in the second part of your question

and in the quarter under absorption effect was that material given that you reduced inventory in the production

yeah it wasn't that it was it was yeah in the quarter yeah not that material

in line with the year yeah thanks

okay thanks our next question comes from adela dashean from jeff reese your line is now open please proceed with your question

thank you and good morning just a follow-up on the the previous rv exposure discussion in q4 my understanding is that you have or are continuing to launch the new products even now in q4 so i mean if that is the case then should the i guess that the share of different product categories be more tilted away from rvs in the coming quarter or or do you still think that you know the the rv weakness is going to be that pronounced for it to have as big of an impact as it is in q3 what's the view on that

good morning no you're right i think we were just trying to comment on history before but as we've seen this year you know rv has been your date small minus and other categories are are growing and given you know all the dynamics we talked about them that you also described we we expected rv share to to you know not swing back to to a higher share rather the opposite in the fourth quarter so that's that's correct

makes sense thanks so much

as a reminder if you would like to ask a question on today's call please press star followed by 1 on your telephone keypad and if you wish to withdraw your question then it is star followed by 2 our next question comes from matt's list from kepler chevro your line is now open please go ahead

yeah i thank you for taking my question a couple of them sorry yeah just coming back to the launch cost for the car seat and congrats on the awards there but will they continue to increase in the fourth quarter or is it sort of a peak here in the third quarter for for those i mean since q4 is a smaller quarter it could be more sort of having a larger relative impact

yeah no the the very specific now but let's see on on the car seat sgna related costs in q4 there's uh not the peak in development cost if we start there because we have launched these first products now there are more in the pipeline but there's not a peak in q4 there will be more sales and marketing costs because we are now live in in six countries we're adding over 20 countries in in q4 so there we will for sure see increased cost in q4

and should we expect those to be material it's the smallest quarter i mean you barely break even in the fourth quarter is it sort of in in terms of money in money terms is it sort of

well it matters for sure but if it would have been a very big effect we would have commented on it proactively sure

and then i guess you the and it seems that you're moving well here in europe but do do this to an extent sort of well make you more sort of likely to to to continue in the u.s market as well or is it something that you is not affecting that position well

we are moving forward with the developing products and they are well underway for the u.s market so we would have done that anyways to be honest so i think in all honesty not not the direct impact on the decision to on the u.s portfolio or the entry timing of course it does on a sort of more wider in a wider picture kind of way give more confidence to you know our ability to deliver the best product to the market also in seats so increased confidence i guess a little bit

great and and well coming back to pricing i mean the product losses improve pricing in general terms i guess but do you expect to be able to make or do you need to make any price adjustments i mean normally you make the decision price adjustments early next year is it sort of something that you plan to do

yes we are we have historically exactly as you commented done and the brand and the industry is doing price increases on a jan one basis during pandemic it was a bit different but this year in 2024 we decided to keep basically prices flat on comparable existing products and the increase we have seen is due to two new products for 2025 we will go back to the historical approach we will have price increases as of jan one so on sort of existing products we will see a price increase in line where we have been throughout the history before the pandemic which is in total of around one and a half to two percent in that in that in that span

okay thank you and finally just about the mean the the upcoming election the u.s put some focus on on potential tariffs to well european produced products entering the u.s market could you just update me on the balance there between sales and products local production of if you're affected by any potential tariffs

yep absolutely yeah we yeah no we we will be affected but but tariffs but we do have a i think quite fortunate situation that we have two sites two factories in the u.s locally so we have one factory in the chicago area that does rooftop boxes among other things and we have one factory on the east coast in connecticut that does aluminum and plastic products in production terms by carriers for example which is a big product for the for the north american market so some product we import from our european facilities some some raw materials and some parts we of course import but we do have two manufacturing sites in the u.s and quite established network of of local and regional suppliers as well

okay great thank you very much thank you

our next question comes from benjamin walsh from abg your line is now open please go ahead

hello guys this is benjamin stepping in for frederick today i'll try to sneak a question as well um could you share what part of growth in a passenger of an aisle that is directly attributable to model ranges that did not exist a year ago please or at least give us a guidance on on that figure

hi benjamin we do we have decided this year to to give quarterly sales growth numbers per product category but we're not going in more detail than that so i guess the only comment would make it that it's a combination it's a combination of you know upgraded existing products we talked about the tulip chariot already and the and the strollers and there are sort of new categories dog transportation and and car seats so it's

both all right thank you

our next question comes from carl degenberg from carnage your line is now open please proceed

thank you very much good morning guys so uh just one question from me i think uh will be helpful if you could share a little bit uh what you're seeing in the market development here i mean i guess uh quite impressive here to see that you're growing organically both in in europe rest of world but also i guess predominantly in in region america has given that there's been quite some discussion around uh you know promotions and maybe consumer sentiment i think a little bit weak since the summer so i just wanted to uh ask there if you can elude a little bit what you're seeing in the u.s. this this promotion pressure is sitting a little bit here when we go into q4 or or has to be any let's say material difference there throughout the quarter

i think the trends are very much the same but thank you carl for the question it's very much the same as the previous quarters it's a tough market in the u.s. it's been quite cautious on the consumer side we don't see consumer sentiment picking up really there was hope i guess during spring but that sort of turned down and now it's sort of left on the retail side quite promotional cautious on inventory and orders last couple of promotional periods i don't think any major retailers been really happy about sort of the effect to drive volume through through discounts either so it's quite stable at the at the it may maybe improving slightly but that would be an optimistic view i think of the north american market so quite quite stable at the course level as we've seen before

yeah yeah and and the discussions around promotions i mean is that having any material effect on on let's say your operation performance or can you still keep your selling prices fairly you know much in line with what your your planning and anticipation has been going into this period

yeah i know we we manage quite well and i think one one key sort of distinguishing factor about the the u.s market is that you know the promotions are are set in windows and then there is a recommended retail price so it's quite structured in that way and and that we see that we we haven't seen any negative impact per se of sort of discounting or any price impact of us it's just that the consumer you know demand is is low if you like what we do see though still is that and which continues to play to our favor is that newness works new products sell well to that premium consumer also in the u.s also in a tough market and i think that's the that's the important message and that's why we may be able to to yeah get above that zero line for region americas in in q3 2024

okay thank you very much

we have time for one final question a follow-up from Danny Schmidt from dank's bank your line is now open please go ahead

yes Daniel here again hope you can hear me just a follow-up maybe on that sgna discussion that we just recently had when it comes to marketing spend and all that but if you look at production development cost which you have guided for to be sort of flatish in 24 versus 23 yeah do you see it panning out that way or where are we

yeah no i think we're in 24 to we can add but the 24 versus 23 that's where we will land as as you know guided

it's not going to be higher simply rather sort of in line or lower

yeah we think it's in line in 24 would be in line with 2023 just as we've been saying all year

yeah yeah and and you don't want to come to 25 now or could you give any sort of indication for 25

well i think let's get back to that in q4 but i think that the main message i think for from us is that obviously there's been some pushes that creates you know initial costs in car seats both in development and in launching and the beautiful thing is that we can decide you know what what investments to make in growth for the future but we clearly see this year that newness is driving growth and we will continue to focus on growth and focus on launches so it's not so much about the input as the output but it is about continuing to keep the foot on the gas pedal and and more specific you know launch calendars and discussions on on cost levels let's wait with that until q4

and it's maybe just a final one

yeah sorry but kind of just state the obvious in a way but as we drive growth we drive the leverage of those costs as well on development and sgna so it's it's the right thing to do to yeah to improve the margins through leverage of those costs as well

yeah sure and maybe a tiny question in that we used to talk about a lot before you mentioned legacy products continuing to decline how much of sales is that now

yeah impacts in luggage no it continues to decline and now packs bags and luggage is is the majority is to the branded business so it's if you like the effect from the the kind of steady decline in legacy products is is getting smaller over time

yeah okay well that's correct but you don't want to give a number because it yeah

no maybe we will give a number but let's do it in a structured way maybe then and something yeah that's fine the majority is true thank you yeah yeah that's cool

that concludes the q a session on today's call i'll now hand back over to matias for some closing remarks thank

you very much everybody for joining this quarter's call thank you operator and look forward to talking to all of you again in the quarter's time