Release Date: July 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dometic Group AB (DTCGF, Financial) reported a stabilization in order intake in Q2 compared to Q1, with a better backlog situation at the end of the quarter.
- The restructuring program introduced in December is running according to plan, contributing to improved efficiency and cost savings.
- Free cash flow remained strong at SEK1.3 billion, maintaining a leverage ratio of 3.3, similar to Q1.
- The company achieved a 1.3% improvement in gross margin, driven by sales mix and efficiency measures.
- Positive growth was observed in the land vehicles segment, particularly in the commercial part and residential products in Europe.
Negative Points
- Dometic Group AB (DTCGF) experienced an 11% negative organic growth in Q2, impacted by turbulent market conditions and low consumer confidence.
- Adjusted EPS decreased to SEK1.38 from SEK1.76 a year ago, reflecting lower profitability.
- The company faced production disruptions in KT, Texas, due to pollution in a foaming tank, affecting distribution.
- Tariff uncertainties and discussions continue to impact consumer and dealer sentiment, particularly in the American markets.
- The marine and adventure segments showed a decline in margins compared to the previous year.
Q & A Highlights
Q: Was there anything particularly impacting the free cash flow in this quarter, and how do you see the cash flow pattern in the second half of the year?
A: There was nothing particular more than our efforts in optimizing inventory and accounts receivable. We expect robust free cash flow numbers in the coming quarters, although not at the same level as in recent years, considering our seasonal pattern where Q2 is typically the strongest.
Q: Could you elaborate on the gross margin improvements and the role of the restructuring program and other efficiency measures?
A: The improvements are due to several factors, including a reduction in factory-related FTEs, optimization of our logistics footprint, and successful sourcing improvements. Additionally, there is a mix effect with a larger share of service and aftermarket sales.
Q: What is the latest update on the legal situation regarding the earn-out?
A: There is no change from our perspective. We have a date in September, and we believe we have a good case. Currently, we have around USD 66 million booked on our balance sheet for this.
Q: Can you provide an update on the restructuring program's progress and its impact on savings?
A: We are on an annualized pace of SEK 195 million towards our SEK 300 million target for 2025. The program is progressing according to plan, with gradual impacts expected on our numbers.
Q: How is the order intake developing across different segments?
A: We see stabilization in service and aftermarket and distribution, while OEM is still low but better than previous quarters. The backlog situation at the end of Q2 is better than at the end of Q1, providing some optimism for future numbers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
