Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Thule Group AB (THUPY, Financial) achieved a 4% organic growth in Q3 2024, with stronger performance in Europe and the rest of the world compared to the Americas.
- The company reported a record-high EBIT margin of 17.6% for the third quarter, excluding the pandemic years.
- Thule Group AB (THUPY) maintained a strong cash flow from operations, reaching almost SEK1 billion in the quarter.
- The company won the prestigious ADAC car seat consumer test in Europe, enhancing its brand reputation.
- Thule Group AB (THUPY) successfully launched new products, including in the dog transportation category, and expanded its direct-to-consumer business to six new countries.
Negative Points
- The North American market remains challenging, with cautious consumer behavior and tough market conditions.
- Packs, Bags & Luggage category saw a decline of 4% in the quarter, continuing the trend of declining legacy products.
- The RV Products segment experienced flat sales, with a decline in sales to OE customers offset by growth in the dealer channel.
- The company faces higher SG&A expenses due to investments in new product categories and marketing efforts.
- Inventory levels have been reduced more than anticipated, which may impact production and sales in the short term.
Q & A Highlights
Q: Could you provide insights into the car seat launch in the EU and its reception so far?
A: Mattias Ankarberg, CEO, explained that the car seat launch has been well-received, with strong placements in premium retailers and positive test results. The focus has been on establishing a premium position rather than volume. The launch in more than 20 new markets in Q4 is expected to add volumes, and production is being ramped up to ensure quality and efficiency.
Q: How significant is the recent car seat test win in Germany for Thule's market strategy?
A: Ankarberg noted that winning the prestigious ADAC test is a major boost, especially in Germany, the largest market in Europe. It is recognized immediately and helps build brand credibility, although sales impact is not guaranteed. The award has generated positive buzz across Europe.
Q: Can you discuss the inventory levels and expectations for the end of the year?
A: Toby Lawton, CFO, stated that inventory reduction has exceeded expectations due to effective management and a tougher market. Inventory is expected to increase slightly in Q4 due to seasonal build-up, but the company will remain ahead of its reduction targets.
Q: What are the expectations for the RV segment in Q4, given the current market conditions?
A: Ankarberg mentioned that the RV segment is expected to remain challenging, particularly for OEMs, with downtime anticipated in Q4. The aftermarket is performing better, but the overall RV share is likely to decrease in Q4.
Q: How do you see the SG&A and product development costs evolving, especially with new product launches?
A: Ankarberg highlighted that SG&A costs are higher due to investments in new categories like car seats. While some initial costs won't repeat next year, the company plans to continue investing in growth. The focus is on leveraging sales growth to improve margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
