Dometic Group, parent of the Igloo and Frontrunner brands, among others, reported that fourth-quarter 2023 net sales declined 13 percent on an organic basis to SEK 5.33 billion. Sweden-based Dometic reports in the Swedish krona currency.

In a seasonally weak quarter, organic net sales in the Distribution sales channel declined by 20 percent as most retailers reportedly sought to re-balance their inventories with a temporary larger negative impact on the Igloo business. As expected, the situation in the Service & Aftermarket sales channel continues to improve gradually, and organic net sales declined by 3 percent for the quarter, compared sequentially to a decline of 5 percent in the 2023 third quarter. Net sales in the OEM sales channel declined by 14 percent organically, mainly due to lower net sales in Marine and in RV Americas.

The EBITA margin before items affecting comparability for the quarter improved to 8.7 percent of sales from 7.0 percent in the prior-year quarter, reportedly supported by price management, cost reductions and net sales mix. The company said its strategy to prioritize margins before volume is becoming increasingly visible in its margin development.

The APAC, EMEA and Global segments all reportedly showed improvements compared with the corresponding quarter in 2022. In the Global segment, the Igloo business reportedly delivered a stronger margin despite lower net sales. EMEA’s margin improved to 0.3 percent in Q4 from negative 3.8 percent in the prior-year quarter and cost reduction activities have reportedly started to generate results, while the sales mix continues to have a negative effect. The Marine segment’s margin was said to be robust at 21.6 percent of sales, compared to 25.5 percent in the prior-year quarter, despite an organic net sales decline of 12 percent. The margin for the Americas segment reportedly remains under pressure and below expectations.

Todd Seyfert was appointed as the new president for the Americas segment on January 9. Most recently, he was the CEO at FeraDyne Outdoors for over seven years after a short time as SVP of sales at Vista Outdoor, and prior at ATK, Magnum Research, Bushnell, and Michaels of Oregon.

“Todd has vast management experience from the outdoor industry and I am convinced we will accelerate our transformation journey and drive efficiencies and margin improvements in the segment,” commented Juan Vargues, president and CEO of Dometic Group.

The operating cash flow was said to be “solid” at SEK 488 million, compared to a strong fourth quarter 2022 that netted SEK 1.12 billion. Inventory levels reportedly declined in the quarter and were SEK 2 billion lower than by year-end 2022. The net debt to EBITDA leverage ratio declined to 2.7x from 2.9x at the of the third quarter 2023.

For the full year:

  • Net sales were SEK 27,775 m (29,764); a decrease of 7 percent, with organic growth declining 12 percent.
  • Operating profit (EBITA) before items affecting comparability was SEK 3,463 m (3,931), corresponding to a margin of 12.5 percent (13.2 percent).
  • Operating profit (EBITA)) was SEK 3,296 m (3,399), corresponding to a margin of 11.9 percent (11.4 percent).
  • Operating profit (EBIT) was SEK 2,682 m (2,789), corresponding to a margin of 9.7 percent (9.4 percent).
  • Profit for the full year was SEK 1,332 m (1,784).
  • Earnings per share were SEK 4.17 (5.58). Adjusted earnings per share were SEK 5.93 (8.32).
  • Operating cash flow for the full year was SEK 5,205 m (2,268).
  • Cash flow for the full year was SEK 4 m (-127).

The Group said it has maintained a strong focus on cash flow and is committed to achieving its net debt to EBITDA leverage ratio target of around 2.5x. The company’s cash position is said to be “solid.”

The Board of Directors proposes a dividend of SEK 1.90 per share for 2023, corresponding to a payout ratio of 46 percent.

“The long-term trends in the Mobile Living industry are strong; however, it remains difficult to predict how the current macroeconomic situation and market conditions will impact the business in the short term,” concluded Vargues. “Our planning assumptions from the third quarter 2023 remain largely unchanged; We anticipate the recovery in demand in the Service & Aftermarket sales channel to continue. In the Distribution sales channel, we expect a gradual recovery coming quarters as retail inventories continue to decline. In the OEM sales channel, we foresee a continued weak demand in coming quarters. In this environment we will continue to relentlessly drive our strategic agenda to deliver on our targets, prioritize margins before volumes, and at the same time remain agile to quickly respond to short-term market trends.”

Image courtesy Frontrunner