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Q2 2020 Interim presentation Final INTERIM PRESENTATION
Q2 2020
July 16, 2020
JUAN VARGUES, PRESIDENT & CEO
Q2 2020 HIGHLIGHTS
Market development Unprecedent trading environment in all main markets
due to the spread of COVID-19 in April and May. Faster recovery than expected. June at the same level as last year with strong Aftermarket
sales.
Performance Strong focus on cost reductions and cash flow Continuous investments in innovation and market
development Innovation index reaching 18% (15%). Launched new Outdoor concept in Australia and US Implemented B2C platform in 9 European countries. Strong
growth in US from low base. Continued implementation of actions within the global
restructuring program. 17 locations affected so far 3 locations affected in the quarter.
Q2 2020 FINANCIAL SUMMARY
Net sales of SEK 3,329 m, -38% total growth -38% organic 0% FX 0% M&A COVID-19 impact of around SEK -1.9 billion
EBIT before i.a.c. of SEK 361 m, -60% EBIT margin of 10.9% (16.9%)
+ Pro-actively managing cost base in the light of COVID-19 + Efficiency improvements and pricing + Kampa earn-out COVID-19 impact of around SEK -600 m US trade tariffs of SEK -33 m
EBITDA before i.a.c. of SEK 565 m, -49%
Operating cash flow of SEK 311 m, -78%
EPS of SEK 0.42, -78%
NET SALES AND EBIT BEFORE I.A.C.
SEKm
5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000
500 0
Net sales -38%
EBIT -60%
Q2 2019
Q2 2020
Net sales
Sales grow th
EBIT
EBIT Grow th
SEKm
1,500 1,250 1,000 750 500 250 0
YTD 2020 FINANCIAL SUMMARY
Net sales of SEK 7,527 m, -25% total growth -27% organic +2% FX 0% M&A COVID-19 impact of around SEK -2.3 billion
EBIT before i.a.c. of SEK 783 m, -48% EBIT margin of 10.4% (15.2%)
+ Pro-actively managing cost base in the light of COVID-19 + Efficiency improvements and pricing + Kampa earn-out COVID-19 impact of around SEK -720 m US trade tariffs of SEK -109 m
EBITDA before i.a.c. of SEK 1,193 m, -38%
Operating cash flow of SEK 491 m, -67%
EPS of SEK 1.12, -64%
NET SALES AND EBIT BEFORE I.A.C.
SEKm
11,000 10,000
9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000
0
Net sales -25%
EBIT -48%
YTD 2019
YTD 2020
Net sales
Sales grow th
EBIT
EBIT Grow th
SEKm
3,000 2,500 2,000 1,500 1,000 500 0
APPLICATION AREAS
FOOD & BEVERAGE
6,000
-19%
(-22% CC)
5,500
5,000
4,500
4,000 Jun Sep Dec Mar Jun Sep Dec Mar Jun
2018
2019
2020
POWER & CONTROL
4,500
-12%
(-16% CC)
4,000
3,500
3,000
2,500
2,000
1,500 Jun Sep Dec Mar Jun Sep Dec Mar Jun
2018
2019
2020
CLIMATE
8,500
-14%
(-17% CC)
8,000
7,500
7,000
6,500
6,000 Jun Sep Dec Mar Jun Sep Dec Mar Jun
2018
2019
2020
OTHER APPLICATIONS
2,400
+0%
(-5% CC)
2,200
2,000
1,800
1,600
1,400
1,200
1,000 Jun Sep Dec Mar Jun Sep Dec Mar Jun
2018
2019
2020
SALES SPLIT, APPLICATION AREA*
Food & Beverage, 29% (30%) Climate, 41% (43%) Pow er & Control, 17% (16%) Other applications, 13% (11%)
Actual currency rolling 12 months
*YTD split
SALES GROWTH
Total growth
40% 36% 32% 28% 24% 20% 16% 12%
8% 4% 0% -4% -8% -12% -16% -20% -24% -28% -32% -36% -40%
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
SEKm
20,000 19,000 18,000 17,000 16,000 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000
Organic
M&A net
Net Sales, rolling 12 months
EBIT AND EBIT MARGIN BEFORE I.A.C.
SEKm
1,200
EBIT RUN RATE 10.6% (14.2%)
EBIT-margin
18%
1,050
17%
900
16%
750
15%
600
14%
450
13%
300
12%
150
11%
0
10%
Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
EBIT
EBIT margin, rolling 12 months
AMERICAS
Net sales of SEK 1,553 m, -41% organic Food & Beverage, Climate and Power &
Control reported negative growth as a result of the spread of COVID-19. Growth for mobile cooling. Launched new Outdoor program. Strong B2C e-commerce growth
EBIT before i.a.c. of SEK 124 m, -69% EBIT Margin of 8.0% (15.3%)
+ Adjustment of cost base Volume decline / COVID-19 US trade tariffs
OEM, 51% AM, 49%
Americas, 47% Rest of Group, 53%
NET SALES AND EBIT MARGIN BEFORE I.A.C.
2,800
21.0%
2,400
18.0%
2,000
15.0%
1,600
12.0%
1,200
9.0%
800
6.0%
400
3.0%
0
0.0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
18 18 18 19 19 19 19 20 20
Net sales
EBIT margin
EMEA
Net sales of SEK 1,445 m, -37% organic Food & Beverage, Climate and Power & Control
reported negative growth as a result of the spread of COVID-19. Launched new B2C e-commerce platform in 9 countries. Initiated regionalization of Aftermarket organization
EBIT before i.a.c. of SEK 190 m, -54% EBIT Margin of 13.1% (17.8%)
+ Efficiency improvements + Pricing + Adjustment of cost base Volume decline / COVID-19
OEM, 37% AM, 63%
EMEA, 44% Rest of Group, 57%
NET SALES AND EBIT MARGIN BEFORE I.A.C.
2,400
24.0%
2,100
21.0%
1,800
18.0%
1,500
15.0%
1,200
12.0%
900
9.0%
600
6.0%
300
3.0%
0
0.0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
18 18 18 19 19 19 19 20 20
Net sales
EBIT margin
APAC
Net sales of SEK 321 m, -21% organic Food & Beverage, Climate and Power & Control
reported negative growth as a result of the spread of COVID-19. Changed geographical mix Launched new Outdoor program.
EBIT before i.a.c. of SEK 47 m, -48% EBIT Margin of 14.7% (22.0%)
+ Efficiency improvements + Pricing + Adjustment of cost base Volume decline / COVID-19
OEM, 49% AM, 51%
APAC, 9% Rest of Group, 91%
NET SALES AND EBIT MARGIN BEFORE I.A.C.
600
36.0%
500
30.0%
400
24.0%
300
18.0%
200
12.0%
100
6.0%
0
0.0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
18 18 18 19 19 19 19 20 20
Net sales
EBIT margin
THE STAYCATION TREND YIELDS SIGNIFICANT GROWTH OPPORTUNITIES
Increasing trend in USA for many years: 64% increase (2014-2017) in number of Americans going camping (>three times/year)* Significant growth in younger consumer groups (millennials stand for 40% of campers in US)*
A new global reality: 47% of Americans who planned a leisure trip will instead go camping** 75% of Swedes will spend their holiday in Sweden summer 2020*** High demand for leisure vehicles across all markets New target groups experiencing Camping and the Outdoors for the first time
*North American Camping report, 2018 **North American Camping Special Covid-19 report, May 2020 *** Dometic Staycation survey, May 2020
DOMETIC WELL POSITIONED FOR GROWTH IN THE OUTDOOR MARKET
Leading global position within the RV and Marine-related outdoor market We have the knowledge, heritage, and trust of providing solutions that solve the
consumers´ essential needs when spending time outdoors Now also addressing the total market of vehicle based outdoor activities including
Passenger Vehicles with new product solutions 28 millions SUVs registered* globally 2018 In 2023 the SUV sales** is projected to reach 53 million units. Objective is to be the leading vehicle based outdoor brand in the world
We have expanded the already broad outdoor assortment with 600 new outdoor products the last 12 months (tents, sleeping accessories, stoves, barbeques, generators, etc.)
We have won several prestigious brand & product awards and recognitions (Red Dot Award, European Innovation Award, Promobil´s Best Brand, etc.)
*Source - JATO **Source - Research Nester
THE LEADING VEHICLE BASED OUTDOOR BRAND
VACATION
More than 3 days
STAYCATION
1-3 days
ACTIVITY
Over the day
4 MAJOR PRODUCT CATEGORIES DRIVE THE OUTDOOR EXPANSION TILL NOW
All launched during last R12
Pow ered coolers
Inflatable camping tents
Rooftop tents
Outdoor cooking
A GROWING VBA* OUTDOOR ASSORTMENT
*VBA Vehicle Based Activities
OTHERS
CLIMATE
OOUUTDOOORR VVBAA
POWER & CONTROL
FOOD & BEVERAGE
600+
We have e xpande d the alre ady broad outdoor portfolio w ith 600+ new outdoor products the last 12 m onths (inflatable tents, roof top tents, sleeping accessories, pow ered coolers, stoves, barbeques, generators, etc.)
DOMETIC PRESENT IN LEADING OUTDOOR RETAIL CHAINS GLOBALLY
36 new stores in progress to be opened in REI and a 300% revenue growth in REI
+205% growth YTD in own B2C US e-commerce channels
Steady increase in amount of stores in Australian and NZ Outdoor Retail (+200 new stores as target)
Launched B2C online stores in nine EU countries*
Americas
EMEA
AUS
*VB*https://store-eu.dometic.com/
Retail footprint in Outdoor chain Anaconda, Australia
STRONG GROWTH IN ONLINE TRAFFIC
TARGET TO REACH 10 MILLIONS GLOBAL VISITORS 2020
Visitors to Dometic.com
12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
0 2016
2020
T raffi c Forecast
Considerable growth of new potential buyers to dometic.com during Q1-Q2 (+40%)
High growth in visits to the dealer locator (+88%)
Traffic to Dometic.com continues to show double digit growth YoY Increase in traffic from younger target groups and females
Visitors to Dometic.com
1,400,000 1,200,000
1,000,000 800,000 600,000
400,000
200,000
2020
0
2019
Jan Feb Mar Apr May June
Staycation and Outdoor trends along with campaign activation and launch of e-commerce in 9 EMEA countries generated an acceleration in traffic and in our own e-commerce
Google searches on Dometic up 30%, bringing an all time high in search visitor traffic
RESTRUCTURING PROGRAM
Locations 3 locations affected in the quarter 17 locations affected in total so far
Employees Approximately 230 employees affected in the quarter Approximately 730 employees affected in total so far
Costs SEK 61 m in the quarter SEK 261 m so far
Q2 STRATEGY EXECUTION
1 Profitable expansion
Increased overall focus on Aftermarket growth Launched Outdoor program in Australia and US Launched new B2C online stores in EMEA and strong
growth in US from low base
2 Product leadership
Improvement of Innovation Index 600 new Outdoor products launched Strong pipeline of additional product launches in 2020
3 Cost reductions
Accelerating global restructuring program Move of awning manufacturing to Mexico completed Continued complexity reduction
STEFAN FRISTEDT, CFO
COVID-19 IMPACT
Implemented activities to reduce the impact from COVID-19 pandemic on the financial result: · Closed factories and sales offices. · Short term work/ furlough, kurzarbeit or forced vacation. · Hiring freeze, ended contracts with consultants and temps. · Reduction of Group and regional management salaries. · Managing supply chain and inventory build ups. · Balance receivables and payables. · Strengthening of balance sheet.
SEKm
Q2 2020*
Net Sales
1,900*
EBIT
600*
SEKm Net Sales EBIT
YTD 2020* 2,300*
720*
*Approximately
Government grants
Received governmental support which has been recorded in the income statement.
SEKm Salary support Other Total
YTD 2020 27 4 31
Other support measures
SEKm
P&L - YTD 2020
Short time
124
work/furlough
Other
19
Total
143
Cash flow YTD 2020 -
95 95
WORKING CAPITAL DEVELOPMENT
SEKm
1,000 23.5%
800
600
400
200
0 -200
-149
-400
-600
Q2 2018
253
Q3 2018
491
Q4 2018
23.5%
587 355
-556
Q1 2019
Q2 2019
Q3 2019
716
Q4 2019
23.3% 25% 20%
15%
-443
10% -90
5%
Q1 2020
0% Q2 2020
Average core WC/ LTM sales
Impact on CF f rom change in CWC
Average CWC/LTM net sales: 23.3 %
WORKING CAPITAL
DAYS, NORMAL CURRENCY
DPO
60
50 51 40
30
20 Q2 Q3 2018
48
Q4 Q1 Q2 Q3 Q4 2019
DPO quarter
DPO LTM
52
Q1 Q2 2020
DIO
160 140 120 120 100
80 60 40
Q2 Q3 2018
101
Q4 Q1 Q2 Q3 Q4 2019
DIO quarter
DIO LTM
112
Q1 Q2 2020
DSO
60 50 56
40
30
20 Q2 Q3 2018
50
Q4 Q1 Q2 Q3 Q4 2019
DSO quarter
DSO LTM
47
Q1 Q2 2020
CAPEX & PRODUCT DEVELOPMENT
(SEKm, % OF NET SALES)
CAPEX
140 2.4% 120 100
80 60 127 40 20
0 Q2 2018
PD
120
100 1.7% 80
60
40
89
20
0 Q2 2018
100 Q3 2018
87 Q3 2018
117 Q4 2018
95 Q4 2018
86 Q1 2019
98 Q1 2019
1.7% 90 Q2
2019
2.0%
104
Q2 2019
71 Q3 2019
95 Q3 2019
114 Q4 2019
98 Q4 2019
74 Q1 2020
96 Q1 2020
7%
6%
5%
4%
1.3% 3% 2%
43
1%
0% Q2 2020
6%
5% 2.2% 4%
3%
74
2%
1%
0% Q2 2020
Q2 2020 CAPEX: 1.3% of net sales. (1.7% in 2019)
Q2 2020 PD: 2.2% of net sales. Includes 5.4m SEK of capitalized spend. (2.0% in 2019)
CASH FLOW
SEKm
1,600 1,400 1,200 1,000
800 600 400 200
0 -200
90%
943
Q2 2018
844
Q3 2018
129%
1,417
1,301
859
918
84
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Operating cash flow
Cash conversion
181
Q1 2020
61%
311 Q2 2020
250% 200% 150%
373
100% 50% 0% -50% -100% -150% -200%
NET DEBT LEVERAGE AND NET DEBT DETAILS
NET DEBT
4.00
3.34
3.00
2.00
1.00
0.00 Q2 2018
SEKm RCF EuroBond EKN Loan Senior term A Senior term B Certif ic ate Local facilities
Total debt Cash
Net debt
3.00
2.83
2.95
2.85
2.68
2.40
2.82
3.15
Signed a new EKN-backed credit facility of SEK 2 billion with a maturity of three years.
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q2 2018 380 0 0
2,883 8,273
0 112
11,648 1,329
10,319
Q3 2018 0
3,089 0
2,017 7,662
0 0
12,768 3,263
9,505
Q4 2018 0
3,077 0
1,461 7,131
0 0
11,670 2,359
9,311
Q1 2019 0
4,120 0
1,458 7,339
499 0
13,416 3,624
9,792
Q2 2019 0
7,326 0 0
5,034 0 0
12,360 2,840
9,521
Q3 2019 0
7,434 0 0
5,335 0 0
12,769 3,900
8,869
Q4 2019 0
7,272 0 0
5,077 0 0
12,349 4,555
7,795
Q1 2020 0
7,643 0 0
5,483 0 0
13,127 4,484
8,642
Q2 2020 0
7,310 2,000
0 5102
0 0
14,412 6,458
9,048
DEBT MATURITY PROFILE MARCH 2020
3,500 3,000 2,500 2,000 1,500 1,000
500 0
0 2020
1,000 2021
3,155 2000 1,972
3,130*
0 2022
2023
2024
2025
3,155 2026
USD Loans New EKN Loan EUR Bonds SEK Bond
SEKm Maturities
USD Loans EUR Bonds SEK Bond New EKN Loan Total
2020 0 0 0 0 0
2021 0 0
1,000 0
1,000
2022 0 0 0 0 0
*Extended in June with one year from 2020 to 2025
2023 0
3,155 0
2,000 5,155
2024 1,972
0 0 0 1,972
2025 3,130
0 0 0 3,130
2026 0
3,155 0 0
3,155
Total
5,102 6,310 1,000 2,000 14,412
Q2 2020 SUMMARY
Business highlights
Unprecedent challenging situation due to the spread of the COVID-19 in April and May but fast recovery in June.
Rapid capacity adaptation to market demand. Working to reduce trade tariff exposure. Solid results despite challenging market situation. Expect much lesser negative impact caused by COVID-19 pandemic
in Q3.
Strategy highlights
Accelerating penetration in Outdoor to benefit from staycation trend. Increasing pace in new product areas and channel development. Continued strong execution on SKU pruning and improving
innovation index. Positive development of global restructuring program.
Financing
Signed a new EKN-backed credit facility of SEK 2 billion with a maturity of three years.