Dometic Group

Quarterly Report • Apr 26, 2019

REPORT ON THE FIRST QUARTER 2019

FIRST QUARTER

• Net sales for the quarter were SEK 4,650 m (4,442); an increase of 5%, of which -6% was organic growth.
• Operating profit before depreciation and amortization (EBITDA) for the quarter was SEK 818 m (761), representing a margin of 17.6% (17.1%).
• Operating profit (EBIT) for the quarter was SEK 618 m (638), representing a margin of 13.3% (14.4%).
• There were no items affecting comparability in the quarter (-).
• Cash flow for the quarter was SEK 1,233 m (-116).
• Operating cash flow for the quarter was SEK 84 m (-27).
• Profit for the quarter was SEK 344 m (375).
• Earnings per share of SEK 1.16 (1.27).

FINANCIAL OVERVIEW

	Q1	Q1	LTM	FY
SEK m	2019	2018	2019	2018
Net sales	4,650	4,442	18,482	18,274
EBITDA	818	761	3,170	3,113
% of net sales	17.6%	17.1%	17.2%	17.0%
Operating profit (EBIT)	618	638	2,567	2,587
% of net sales	13.3%	14.4%	13.9%	14.2%
Operating profit (EBIT) before items affecting comparability	618	638	2,659	2,679
% of net sales	13.3%	14.4%	14.4%	14.7%
Profit for the period	344	375	1,545	1,576
Earnings per share, SEK	1.16	1.27	5.22	5.33
Cash flow for the period	1,233	-116	2,269	920
Operating cash flow⁽¹⁾	84	-27	2,727	2,616
Core working capital	4,716	4,298	4,716	3,986
Capital expenditure in fixed assets	-86	-78	-430	-422
RoOC	29.9%	32.3%	29.9%	30.5%

⁽¹⁾Net cash flow from operations after investments in fixed assets and excluding income tax paid.

STRONG PERFORMANCE IN A CHALLENGING QUARTER

(SEK m) 0 500 1,000 1,500 2,000 2,500 3,000 0 100 200 300 400 500 600 700 800 900 1,000 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 Q RT Quarterly EBIT before i.a.c. Rolling 12-month EBIT before i.a.c.

Operating profit (EBIT) before i.a.c

The first quarter 2019 proves that Dometic stands strong despite a challenging environment in RV OEM. This was one of the more difficult quarters for us in a long time, both in terms of market development as well as comparables. EBIT and EBITDA margins held up well, and we saw improvements in two out of three regions. Businesses outside RV OEM grew by 7 percent, with particularly healthy development in Marine. Total net sales growth was 5 percent, of which -6 percent was organic.

We are pleased to report a positive cash flow in the first quarter for the first time in Dometic's history as a listed company. This is the result of hard work and focus across the organization.

Americas reported total net sales growth of -2 percent, of which -11 percent was organic, and the EBIT margin was 11.6 percent in the quarter. The RV OEM market remained weak, and we have continued to focus on adapting the organization and processes. Q1 2018 was an extremely good quarter for Americas, boosted by strong net sales and positive one-offs. We succeeded in protecting profitability and compensating for the impact of tariffs, whilst at the same time allowing investments in growth initiatives and new opportunities. Considering the good development in our marine business and expected normalization of the inventory levels in the RV industry, we expect the second half of 2019 to be more positive for the region.

EMEA reported total net sales growth of 17 percent, of which 3 percent was organic, and the EBIT margin was 13.5 percent in the quarter. The focus on efficiency improvements and pricing continues to generate a positive development on profitability. The EBIT margin improved by 1.2 percentage points, despite some additional costs related to the acquisition of Kampa. The integration of Kampa has been well executed and the business is performing well. Marine and RV Aftermarket continued to see healthy growth, and OEM growth was mainly driven by a strong trend in Marine.

APAC continues to show a strong EBIT margin, 21.3 percent, positively impacted by disciplined pricing and cost reductions. The reported total net sales growth of -6 percent, of which -10 percent was organic, was negatively impacted by the discontinuation of certain low-margin products early in 2018 and a softer RV OEM market in Pacific. Aftermarket in Asia developed well and grew by 14 percent in the quarter.

Operating cash flow was SEK 84 million, compared with SEK -27 million the same quarter last year. Cash flow remains an important focus area going forward. Leverage was 2.95x at the end of the quarter.

Our outlook for 2019 remains unchanged, with organic sales growth estimated to be slightly positive with an EBIT margin close to 15 percent. Leverage is expected to be around 2.0x by the end of 2019.

Juan Vargues, President and CEO

All references to EBIT and EBIT margin on this page refer to EBIT before items affecting comparability unless otherwise stated. All references to sales development refer to constant currencies.

FINANCIAL SUMMARY – FIRST QUARTER 2019

Net sales were SEK 4,650 m (4,442), an increase of 5% compared with the same quarter last year. This comprised -6% organic growth, 7% currency translation and 4% M&A.

Operating profit before depreciation and amortization (EBITDA) was SEK 818 m (761), an increase of 7% compared with the same quarter last year. The EBITDA margin was 17.6% (17.1%)

Operating profit (EBIT) was SEK 618 m (638), a decrease of 3% compared with the same quarter last year. The EBIT margin was 13.3% (14.4%). Implementation of IFRS 16 impacted Operating profit (EBIT) by net SEK 1 m.

Items affecting comparability totaled SEK -m (-).

Operating profit (EBIT) before items affecting

comparability was SEK 618 m (638), a decrease of 3% compared with the same quarter last year. The EBIT margin was 13.3% (14.4%). Implementation of IFRS 16 improved Operating profit (EBIT) before items affecting comparability by net SEK 1 m.

Financial items totaled a net amount of SEK -127 m (-127), including SEK -110 m (-96) in interest on external bank loans and SEK -4 m (-) for interest on leases as an effect of IFRS 16 implementation. Revaluation of unrealized exchange gains on cash amounted to SEK -12 m (1). Other FX revaluations and other items amounted to SEK -6 m (-35) and financial income to SEK 5 m (3).

Taxes Taxes totalled SEK -147 m (-136), corresponding to 30% (27%) of profit before tax. Total effective tax rate is higher compared to Q1 2018 mainly due to BEAT ("Base Erosion Anti-avoidance Tax), which is an additional minimum tax that was introduced in the 2017 US tax reform. In 2019, the BEAT tax rate has increased from 5% to 10%. Current tax amounted to SEK -110 m (-66) and deferred tax to SEK -37 m (-70). Paid tax of 28% (19%) is higher compared to Q1 2018, mainly due to the Group's tax paying position in Canada.

Profit for the quarter was SEK 344 m (375).

Earnings per share were SEK 1.16 (1.27).

Operating cash flow was SEK 84 m (-27).

Cash flow for the quarter was SEK 1,233 m (-116).

Financial position. Leverage was 2.95x (3.34) at the end of the first quarter of 2019.

Significant events after the period. At the 2019 Annual Shareholders Meeting held on April 9, Fredrik Cappelen was re-elected as member and Chairman of the Board of Directors. Magnus Yngen, Heléne Vibbleus, Peter Sjölander, Erik Olsson, Jacqueline Hoogerbrugge and Rainer Schmückle were re-elected as members of the Board of Directors. The proposed dividend of SEK 2.15 per share was approved.

There have been no other significant events that have impacted financial reporting after the balance sheet date.

	Q1	Q1	Change (%)		LTM	FY
SEK m	2019	2018	Rep.	Adj.⁽¹⁾	2019	2018
Americas	2,241	2,287	-2%	-10%	9,712	9,758
EMEA	1,979	1,696	17%	12%	6,988	6,706
APAC	430	459	-6%	-9%	1,782	1,810
Net sales	4,650	4,442	5%	-2%	18,482	18,274
Americas	259	334	-22%	-29%	1,396	1,470
EMEA	267	209	28%	20%	872	814
APAC	92	95	-4%	-12%	391	395
Operating profit (EBIT) bef. i.a.c.⁽²⁾	618	638	-3%	-11%	2,659	2,679
Americas	11.6%	14.6%			14.4%	15.1%
EMEA	13.5%	12.3%			12.5%	12.1%
APAC	21.3%	20.8%			22.0%	21.8%
Operating profit % bef. i.a.c.⁽²⁾	13.3%	14.4%			14.4%	14.7%

⁽¹⁾Represents change in comparable currency. ⁽²⁾Before items affecting comparability.

Net sales (SEK m)

Sales split AM/OEM

Q1

259 SEK MILLION (334)

OPERATING MARGIN (EBIT%)*

^*EBIT before items affecting comparability.

NET SALES AND OPERATING PROFIT (EBIT)

First quarter 2019

Americas reported net sales of SEK 2,241 m (2,287), representing 48% of Group net sales. Total growth was -2%, of which -11% was organic growth, 9% currency translation and 0% M&A.

Operating profit (EBIT) was SEK 259 m (334); a decrease of 22% compared with the same quarter last year. The EBIT margin was 11.6% (14.6%).

There were no Items affecting comparability (-).

Operating profit (EBIT) before items affecting comparability was SEK 259 m (334); a decrease of 22% compared with the same quarter last year. The EBIT margin was 11.6% (14.6%).

Market development

For the rolling three-month January – March 2019 period, US RV shipments declined by 27% to 100,976 units compared with the same period last year.

Sales of US power boats increased by 3% during 2018.

Business highlights, Q1

Total OEM sales growth was -4%, of which growth in constant currency was -12%. Total Aftermarket sales growth was 5%, of which growth in constant currency was -4%.

RV OEM reported negative sales growth, as a result of a weaker US RV OEM market.

Marine OEM reported strong sales growth and underlying demand remains positive.

CPV OEM reported negative sales growth. Demand for Dometic's solutions continues to grow and the negative development in the quarter is mainly related to timing effects in a project-driven business.

Aftermarket reported negative sales growth. Strong performance in Retail and Lodging was not able to fully offset weaker development in the other businesses.

Proceedings related to the putative class action continue. Dometic remains firm in its position that the allegations in the consolidated case are without merit.

EMEA

Net sales (SEK m)

Sales split AM/OEM

Q1

OPERATING PROFIT (EBIT)*

267 SEK MILLION (209)

OPERATING MARGIN (EBIT%)*

^*EBIT before items affecting comparability

NET SALES AND OPERATING PROFIT (EBIT)

First quarter 2019

EMEA reported net sales of SEK 1,979 m (1,696), representing 43% of Group net sales. Total growth was 17%, of which 3% was organic growth, 4% currency translation and 10% M&A.

Operating profit (EBIT) was SEK 267 m (209), an increase of 28% compared with the same quarter last year. The EBIT margin was 13.5% (12.3%).

There were no Items affecting comparability (-).

Operating profit (EBIT) before items affecting comparability was SEK 267 m (209); an increase of 28% compared with the same quarter last year. The EBIT margin before items affecting comparability was 13.5% (12.3%).

Market development

For the rolling three-month December 2018 – February 2019 period, RV registrations in the largest European markets declined by a modest 0.3%, to 18,455 units compared with the same period last year.

Heavy truck registrations increased by 3% in the rolling three-month December 2018 – February 2019 period, compared with the same period last year.

Business highlights, Q1

Total OEM sales growth was 7%, of which growth in constant currency and excluding the acquisition of Kampa was 3%.

Total Aftermarket sales growth was 28%, of which growth in constant currency and excluding the acquisition of Kampa was 2%.

RV OEM reported modest sales growth. A persistently positive trend in Germany offset a somewhat weaker performance in the Nordics and parts of Southern Europe.

Marine OEM reported strong sales growth with continued positive market trends.

CPV OEM reported negative sales growth.

Aftermarket reported good sales growth, mainly driven by RV, CPV and Marine.

APAC

Net sales (SEK m)

NET SALES AND OPERATING PROFIT (EBIT)

First quarter 2019

APAC reported net sales of SEK 430 m (459), representing 9% of Group net sales. Total growth was -6%, of which -10% was organic growth, 4% currency translation and 0% M&A.

Operating profit (EBIT) was SEK 92 m (95); a decrease of 4% compared with the same quarter last year. The EBIT margin was 21.3% (20.8%).

There were no Items affecting comparability (-).

Operating profit (EBIT) before items affecting comparability was SEK 92 m (95); a decrease of 4% compared with the same quarter last year. The EBIT margin before items affecting comparability was 21.3% (20.8%).

Sales split AM/OEM

Q1

NET SALES

OPERATING PROFIT (EBIT)*

92 SEK MILLION (95)

OPERATING MARGIN (EBIT%)*

^*EBIT before items affecting comparability

Market development

For the rolling three-month December 2018 – February 2019 period, Australian domestic RV production increased by 5%, to 4,704 units compared with the same period last year. Comparison to periods before June 2018 is not accurate as manufacturers have been added in 2018.

Business highlights, Q1

Total OEM sales growth was -10%, of which growth in constant currency was -13%.

Total Aftermarket sales growth was -2%, of which growth in constant currency was -6%.

RV OEM reported negative sales growth. Demand continued to be soft in Pacific, whilst the Rest of Asia reported good growth.

Marine OEM reported negative sales growth. The positive development in Pacific did not fully offset the negative performance in Rest of Asia.

CPV OEM reported negative sales growth, impacted by the discontinuation of sales of certain low-margin products in 2018.

Aftermarket reported a negative performance. Strong growth in RV and Marine did not fully compensate for the negative development in the other businesses.

PARENT COMPANY DOMETIC GROUP AB (PUBL)

First quarter 2019

The Parent Company Dometic Group AB (publ) comprises the functions of the Group's head office, such as Group-wide management and administration. The Parent Company invoices its costs to subsidiaries.

For the first quarter 2019, the Parent Company had an operating profit of SEK 0 m (0), including administrative expenses of SEK -50 m (-37) and other operating income SEK 51 m (37).

Profit (loss) from financial items totaled SEK -217 m (-206), including interest income from subsidiaries of SEK 72 m (56), interest expenses to subsidiaries of SEK - m (-) and other financial expenses of SEK -289 m (-263).

Profit (loss) for the first quarter amounted to SEK -7 m (-1).

For further information, please refer to the Parent Company's condensed financial statements on page 11.

Solna, April 26, 2019

Juan Vargues President and CEO

REVIEW

This interim report has not been subject to review by the Dometic Group AB's (publ) external auditor.

CONSOLIDATED INCOME STATEMENT

	Q1	Q1	FY
SEK m	2019	2018	2018
Net sales	4,650	4,442	18,274
Cost of goods sold	-3,188	-3,064	-12,323
Gross Profit	1,462	1,378	5,951
Sales expenses	-563	-527	-2,259
Administrative expenses	-221	-191	-855
Other operating income and expenses	15	30	61
Items affecting comparability	0	0	-92
Amortization of acquisition related intangible assets	-76	-51	-219
Operating profit	618	638	2,587
Financial income	5	3	11
Financial expenses	-132	-130	-442
Loss from financial items	-127	-127	-431
Profit (loss) before tax	491	511	2,156
Taxes	-147	-136	-580
Profit (loss) for the period	344	375	1,576
Profit (loss) for the period attributable to owners of the Parent Company	344	375	1,576
Earnings per share before and after dilution, SEK - Owners of the Parent Company	1.16	1.27	5.33
Average number of shares, million	295.8	295.8	295.8

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Q1	Q1	FY
SEK m	2019	2018	2018
Profit (loss) for the period	344	375	1,576
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit pension plans, net of tax	-46	21	-3
	-46	21	-3
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges, net of tax	5	34	8
Gains/losses from hedges of net investments in foreign operations, net of tax	-27	-65	-14
Exchange rate differences on translation of foreign operations	665	303	554
	643	272	548
Other comprehensive income for the period	597	293	545
Total comprehensive income for the period	941	668	2,121
Total comprehensive income for the period attributable to
Owners of the Parent Company	941	668	2,121

CONSOLIDATED BALANCE SHEET (IN SUMMARY)

	Mar 31,	Mar 31,	Dec 31,
SEK m	2019	2018	2018
ASSETS
Non-current assets
Goodwill and trademarks	18,786	17,363	18,203
Other intangible assets	4,642	4,237	4,507
Tangible assets	2,160	2,016	2,111
Right-of-use assets	513	–	–
Deferred tax assets	589	842	627
Derivatives, long-term	0	11	0
Other non-current assets	90	69	71
Total non-current assets	26,780	24,538	25,519
Current assets
Inventories	3,873	3,701	3,772
Trade receivables	2,459	2,159	1,705
Current tax assets	97	188	86
Derivatives, short-term	83	152	107
Other current receivables	666	586	681
Prepaid expenses and accrued income	151	148	128
Cash and cash equivalents	3,363	1,066	2,113
Total current assets	10,692	8,000	8,592
TOTAL ASSETS	37,472	32,538	34,111
EQUITY AND LIABILITIES
EQUITY	16,970	15,182	16,029
LIABILITIES
Non-current liabilities
Liabilities to credit institutions, long-term	12,448	9,962	11,217
Deferred tax liabilities	2,004	1,930	1,944
Other non-current liabilities	163	41	153
Leasing liabilities, long-term	367	–	–
Provisions for pensions	798	681	739
Other provisions, long-term	218	148	191
Total non-current liabilities	15,998	12,762	14,244
Current liabilities
Liabilities to credit institutions, short-term	909	1,182	393
Trade payables	1,616	1,562	1,491
Current tax liabilities	395	328	399
Advance payments from customers	33	29	38
Leasing liabilities, short-term	149	–	–
Derivatives, short-term	27	34	108
Other provisions, short-term	290	302	295
Other current liabilities	226	306	203
Accrued expenses and prepaid income	858	852	911
Total current liabilities	4,504	4,595	3,838
TOTAL LIABILITIES	20,502	17,356	18,082
TOTAL EQUITY AND LIABILITIES	37,472	32,538	34,111

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IN SUMMARY)

	Jan-Mar	Jan-Mar	FY
SEK m	2019	2018	2018
Opening balance for the period	16,029	14,514	14,514
Profit (loss) for the period	344	375	1,576
Other comprehensive income for the period	597	293	545
Total comprehensive income for the period	941	668	2,121
Transactions with owners
Dividend to shareholders of the Parent Company	–	–	-606
Total transactions with owners	–	–	-606
Closing balance for the period	16,970	15,182	16,029

CONSOLIDATED STATEMENT OF CASH FLOW

	Q1	Q1	FY
SEK m	2019	2018	2018
Cash flow from operations
Operating profit	618	638	2,587
Adjustment for other non-cash items
Depreciation and amortization	200	123	526
Adjustments for other non-cash items	-42	-28	122
Changes in working capital
Changes in inventories	25	-254	-41
Changes in trade receivables	-690	-623	-112
Changes in trade payables	109	52	-80
Changes in other working capital	-50	143	36
Income tax paid	-137	-97	-313
Net cash flow from operations	33	-46	2,725
Cash flow from investments
Acquisition of operations, net of cash acquired	–	–	-492
Investments in fixed assets	-86	-78	-422
Proceeds from sale of fixed assets	0	64	70
Deposit	–	-233	-233
Other investing activities	-1	0	1
Net cash flow from investments	-87	-247	-1,076
Cash flow from financing
Borrowings from credit institutions	1,494	542	3,183
Repayment of loans to credit institutions	-54	-233	-2,849
Payment of lease liability	-43	–	–
Paid interest	-81	-87	-376
Received interest	1	1	7
Other financing activities	-30	-46	-88
Dividend paid to shareholders of the Parent Company	–	–	-606
Net cash flow from financing	1,287	177	-729
Cash flow for the period	1,233	-116	920
Cash and cash equivalents at beginning of period	2,113	1,159	1,159
Exchange differences on cash and cash equivalents	17	23	34
Cash and cash equivalents at end of period	3,363	1,066	2,113

PARENT COMPANY INCOME STATEMENT

	Q1	Q1	FY
SEK m	2019	2018	2018
Administrative expenses	-50	-37	-171
Other operating income	51	37	166
Operating profit	0	0	-5
Interest income subsidiaries	72	56	259
Interest expenses subsidiaries	–	–	–
Result from shares in subsidiaries	–	–	528
Other financial expenses	-289	-263	-777
Profit (loss) from financial items	-217	-206	10
Group contributions	210	205	510
Profit (loss) before tax	-7	-1	516
Taxes	0	0	1
Profit (loss) for the period	-7	-1	517

PARENT COMPANY BALANCE SHEET (IN SUMMARY)

	Mar 31,	Mar 31,	Dec 31,
SEK m	2019	2018	2018
ASSETS
Non-current assets
Shares in subsidiaries	16,228	16,622	16,228
Other non-current assets	5,779	5,203	5,573
Total non-current assets	22,007	21,825	21,801
Current assets	3,393	1,274	1,825
Total current assets	3,393	1,274	1,825
TOTAL ASSETS	25,400	23,099	23,626
EQUITY	10,749	10,843	10,755
PROVISIONS
Provisions	51	30	42
Total provisions	51	30	42
LIABILITIES
Non-current liabilities	12,448	9,962	11,217
Total non-current liabilities	12,448	9,962	11,217
Current liabilities	2,152	2,264	1,611
Total current liabilities	2,152	2,264	1,611
TOTAL LIABILITIES	14,651	12,256	12,870
TOTAL EQUITY AND LIABILITIES	25,400	23,099	23,626

CONDENSED NOTES

NOTE 1 | ACCOUNTING PRINCIPLES

Dometic Group AB (publ) and its subsidiaries (together "the Dometic Group", "Dometic" or "the Group") applies International Financial Reporting Standards (IFRS), as adopted by the EU. This consolidated Interim Financial Report has been prepared in accordance with IAS 34 'Interim Financial Reporting'. The accounting and valuation principles in this interim report correspond to principles applied by the Group in the 2018 Annual Report and should be read in conjunction with that Annual Report, available at www.dometic.com.

The Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities, issued by the Swedish Financial Reporting Board, have been applied for the Parent Company. The interim report comprises pages 1-18 and pages 1-11 are thus an integral part of this financial report (IAS 34.16A).

Totals quoted in tables and statements may not always be the exact sum of the individual items because of rounding differences. The aim is for each line item to correspond to its source, and rounding differences may therefore arise.

New and amended accounting principles for 2019 adopted by the Group

IFRS 16 Leases

IFRS 16 Leases came into effect as of January 1, 2019. The Group has adopted IFRS 16 Leases and it has been applied by the Group since January 1, 2019. This supersedes all lease requirements under IFRS.

For the IFRS 16 transition, Dometic has decided to apply the simplified retrospective approach and has not restated comparative amounts for 2018, the year prior to first adoption. All right-of-use assets are measured at the amount of the lease liability on adoption, and are adjusted for any prepaid or accrued lease expense.

The Group has decided to make use of the practical expedient for non-lease components, which means that each lease component and any associated non-lease component will not be treated separately but accounted for as one. Leases with similar characteristics can as a practical expedient be treated under the so-called portfolio approach. Dometic Group will not use this practical expedient but will account for leases on an individual basis. Dometic Group is using the recognition exemption for short-term leases and low-value leases and has decided to classify all IT and office equipment as low-value assets and hence not included them in the balance sheet.

The impact on the Group's consolidated financial statements is an opening balance increase, deriving from a lease liability and right-of-use asset of around SEK 500 m respectively adjusted by the amount of prepaid or accrued lease payment. There is no effect in equity. Below details show the link to recognized IFRS 16 opening lease liabilities from the previously classified operating lease commitments of IAS 17 Leases.

Future minimum lease charges for operational lease agreements at nominal value on December 31, 2018 amounted to SEK 698 m. This amount was reduced by short-term lease agreements of SEK 164 m, low-value asset lease agreements of SEK 16 m, increased by lease term extensions of SEK 25 m and it was

reduced by the impact of discounting of SEK 26 m. This results in an opening lease liability of SEK 517 m for January 1, 2019.

The detailed description of the accounting and valuation principles for leases applied by the Group in this interim report are found in Note 2.1.1 Changes in accounting policies, New and amended accounting policies for 2019 and later, of the 2018 Annual Report.

IFRIC 23 Uncertainty over Income Tax Treatments IFRIC 23 – Interpretation 23 Uncertainty over Income Tax Treatments is effective as of January 1, 2019. The effect from the transition is nil. The Group has applied IFRIC 23 since January 1, 2019.

NOTE 2 | RISKS AND UNCERTAINTIES

Risks are part of any business and Dometic is no exception. As a global Group with production and distribution all over the world, Dometic faces risks that can impact its ability to achieve established goals, including financial targets. Effective risk management of business and market risks, operational risks (including sustainability risks), compliance and regulatory risks and financial risks creates opportunities and effective risk protection.

Dometic works according to an established risk management process with risk identification, risk assessment, risk prioritization, risk response and monitoring. The risk universe together with global and regional risk registers, risk assessments, risk maps, risk owners and the Risk Committee constitute the cornerstones of the Group's risk management. Risk responses could be avoiding the risk, reducing the risk, sharing the risk or accepting the risk. Examples of risk responses are internal control framework, internal quality programs, whistle blowing functions, insurance programs and crisis management procedures for offices and management, as well as for local factories and warehouses, as part of business continuity plans, and also to follow the development of external risks in order to be able to act quickly. Risks and risk responses are assessed annually and documented in a risk register that generates risk maps on Group and regional levels. These risk maps are the foundation for the Group's operational risk ownership and also serve as a foundation for the Group's control functions, such as Internal Control and Internal Audit, for their prioritization of focus areas. Dometic's risk owners are members of Group senior management as well as specialists and functional heads of departments. Risk owners assess their respective risks in terms of likelihood and impact and discuss and approve risk responses in terms of risk mitigating activities

The Risk Committee is the operational forum on Group level with the purpose to discuss and make decisions on risk-mitigating activities and is represented by Finance, Operations, Product Development, HR including Health and Safety, Legal, Quality, Internal Control and Internal Audit. The CFO is the chairman of the Risk Committee. The main tasks of the Risk Committee are to assess Group risks, discuss recent risk-related issues, facilitate input from Risk Committee members and review riskrelated reports and evaluate and approve risk mitigating

activities. Formal minutes with agreed actions are recorded and reviewed in the next meeting. The work of the Risk Committee is regularly reported to the Audit Committee and the Board of Directors annually.

Financial risks are risks associated with Dometic's global presence and can influence the profit and financial position, as well the ability to achieve established goals. Financial risks are managed in accordance with the Finance Policy approved by the Board. Financial risks are divided into currency risks, interest rate risks, liquidity risks, financing risks, credit risks and tax risks.

As Dometic is a global Group with operations in many countries, Dometic is exposed to both transaction risks and translation risks. Transaction risk arises where assets and liabilities are stated in different currencies and certain net sales and costs arise in different currencies. Translation risk arises when the Group's financial statements are consolidated, and the currencies differ from the functional currency of certain operating subsidiaries. Changes in interest rates can impact the Group's profit and cash flow. Liquidity risk refer to the inability to meet payment obligations due to insufficient funds or inability to meet payment obligation without significant higher financing cost. Maintaining the Group's capital structure and reducing the cost of capital through optimal capital structure are crucial for the Group's ability to continue to generate returns for shareholders. Failure by counterparties to meet payment obligations can have a negative impact on the Group's profit and financial position.

TABLE TO NOTE 3 – FINANCIAL INSTRUMENTS

Changes in tax laws could increase Dometic's tax burden or otherwise have a material adverse effect on the Company's business, financial position and profit. The cancellation or restriction on the use of the Group's tax loss carry forwards may have a significant impact on the Group's tax burden, including a potential imposition of tax surcharges, and could have a material adverse effect on the Company's business, financial position and profit. Dometic's tax burden could increase if tax authorities consider that Dometic does not act in accordance with applicable rules on transfer pricing. Dometic´s risk and risk management are described on pages 67-71 and on pages 97-100 of the 2018 Annual report.

NOTE 3 | FINANCIAL INSTRUMENTS

Dometic uses interest rate swaps to hedge senior facility term loans to move from a floating interest rate to a fixed interest rate. The Group also uses currency forward agreements to hedge part of its cash flow exposure.

The fair values of Dometic's derivative assets and liabilities were SEK 83 m (Q1 2018: SEK 163 m) and SEK 27 m, (Q1 2018: SEK 34 m). The value of derivatives is based on published prices in an active market. No transfers between levels of the fair value hierarchy have occurred during the period. For financial assets and liabilities other than derivatives, fair value is assumed to be equal to the carrying amount.

Mar 31, 2019	Balance sheet carrying amount	Financial instruments at amortized cost	Financial instruments at fair value	Derivatives used for hedging
Per category
Derivatives	83	–	12	71
Financial assets	6,578	6,578	–	–
Total financial assets	6,662	6,578	12	71
Derivatives	27	–	15	12
Financial liabilities	15,363	15,363	–	–
Total financial liabilities	15,389	15,363	15	12

NOTE 4 | SEGMENT INFORMATION

	Q1	Q1	FY
SEK m	2019	2018	2018
Net sales, external
Americas
OEM	1,658	1,731	6,736
Aftermarket	583	557	3,022
Americas net sales, external	2,241	2,287	9,758
RV	1,191	1,369	5,595
Marine	966	839	3,757
CPV	48	50	229
Other (Lodging and Retail)	36	29	177
Americas net sales, external	2,241	2,287	9,758
EMEA
OEM	993	924	3,532
Aftermarket	986	772	3,173
EMEA net sales, external	1,979	1,696	6,706
RV	1,077	857	3,180
Marine	224	191	805
CPV	428	409	1,769
Other (Lodging and Retail)	250	240	951
EMEA net sales, external	1,979	1,696	6,706
APAC
OEM	192	215	857
Aftermarket	238	244	954
APAC net sales, external	430	459	1,810
RV	219	221	925
Marine	36	33	112
CPV	33	46	153
Other (Lodging and Retail)	143	160	620
APAC net sales, external	430	459	1,810
Net sales, external
Americas	2,241	2,287	9,758
EMEA	1,979	1,696	6,706
APAC	430	459	1,810
Total net sales, external	4,650	4,442	18,274
Operating profit (EBIT) before i a c
Americas	259	334	1,470
EMEA	267	209	814
APAC	92	95	395
Total operating profit before i a c	618	638	2,679
Items affecting comparability
Americas	–	–	-34
EMEA	–	–	-57
APAC	–	–	-1
Total i a c	–	–	-92
Operating profit (EBIT)
Americas	259	334	1,437
EMEA	267	209	756
APAC	92	95	394
Total operating profit (EBIT)	618	638	2,587
Financial income	5	3	11
Financial expenses	-132	-130	-442
Taxes	-147	-136	-580
Profit (loss) for the period	344	375	1,576

Segment performance is primarily assessed based on sales and operating profit. Information regarding income for each region is based on where customers are located. Management follow-up is based on the integrated result in each segment. For further information, please refer to Note 5 of the 2018 Annual Report.

Inter-segment sales were as follows.

	Q1	Q1	FY
SEK m	2019	2018	2018
Americas	112	100	389
EMEA	101	129	464
APAC	662	939	3,165
Eliminations	875	1,168	4,017

NOTE 5 | ITEMS AFFECTING COMPARABILITY

	Q1	Q1	FY
SEK m	2019	2018	2018
Restructuring charges	–	–	-101
Relocation China	–	–	9
Total	–	–	-92

The table below lists items affecting comparability by function.

		Relocation China			Restructuring charges		Total
SEK m	YTD 2019	YTD 2018	FY 2018	YTD 2019	YTD 2018	FY 2018	YTD 2019	YTD 2018	FY 2018
Costs of goods sold	–	–	9	–	–	-66	–	–	-57
Sales expenses	–	–	–	–	–	-6	–	–	-6
Administrative expenses	–	–	–	–	–	-29	–	–	-29
Other operating income and expenses	–	–	–	–	–	–	–	–	–
Total	–	–	9	–	–	-101	–	–	-92

NOTE 6 | AMORTIZATION OF ACQUISITION RELATED INTANGIBLE ASSETS BY FUNCTION

SEK m		Amortization Trademarks	Amortization of Customer Relationship Assets	Amortization of Technology	Amortization of intellectual property	Total
Costs of goods sold
YTD	2019	–	–	-11	-6	-17
YTD	2018	–	–	-10	-6	-16
FY	2018	–	–	-44	-23	-67
Sales expenses
YTD	2019	-14	-44	–	–	-59
YTD	2018	0	-35	–	–	-35
FY	2018	0	-152	–	–	-152
Total Amortization of acquisition related intangible assets
YTD	2019	-14	-44	-11	-6	-76
YTD	2018	0	-35	-10	-6	-51
FY	2018	0	-152	-44	-23	-219

NOTE 7 | RIGHT-OF-USE ASSETS

Right-of-use assets information is specified below as per Q1 2019.

Depreciation and amortization of SEK 200 m includes depreciation Right-of-use assets of SEK 42 m.

	Depreciation and amortization
	YTD	YTD
SEK m	2019	2018
Depreciation and amortization	-200	-123
Add back depreciation related to right-of use assets	42	–
Total	-158	-123

Right-of-use assets

	Mar 31,	Mar 31,
SEK m	2019	2018
Buildings	469	–
Machinery, equipment and other technical installations	44	–
Total	513	–

NOTE 8 | TRANSACTIONS WITH RELATED PARTIES

No transactions between Dometic and related parties that have significantly affected the company's position and earnings took place in Q1 2019.

NOTE 9 | ACQUISITIONS AND DIVESTMENTS 2019

Dometic has not made any acquisitions or divestments during Q1 2019.

2018

Acquisition of Kampa

On December 3 2018, Dometic acquired Kampa, an innovative provider of Retail and Aftermarket products based in the UK.

Kampa significantly broadens Dometic's Retail and Aftermarket offering in EMEA, with good potential for further expansion and profitable growth.

The cash purchase price was GBP 50 m on a debt and cash free basis excluding potential earn-out elements. The total cash purchase price amounted to GBP 57.9 m including earn out elements of GBP 8.5 m. GBP 8.5 m has been accounted for as a non-interest-bearing liability to the Sellers.

If the acquisition had been consolidated as of January 1, 2018, the effect on proforma net sales would have been GBP 40 m and EBITDA of 7 m. Aftermarket sales account for 100% of revenue. The business operates with a small fixed asset base which requires limited Capex each year.

The summary of value adjustments recognized as a result of the preliminary purchase price allocation of Kampa totals SEK 512 m, including goodwill of SEK 309 m, trademarks and tradenames of SEK 16 m, customer relationships of SEK 208 m, other intangible assets of SEK 1 m, operating assets of SEK 222 m, cash of SEK 31 m, other non-current liabilities of SEK 47 m and operating liabilities of SEK 229 m.

Goodwill is justified by new potential customers relationships and market position. Acquisition-related costs in the consolidated income statement for Q4 2018 amount to SEK 10 m. Sales and cost synergies are expected to be limited. The acquisition has affected consolidated net sales with SEK 12 m and operating profit of SEK -3.5 m including step up inventory of -2.6 m.

NOTE 10 | SIGNIFICANT EVENTS AFTER THE PERIOD

At the 2019 Annual Shareholders Meeting held on April 9, Fredrik Cappelen was re-elected as member and Chairman of the Board of Directors. Magnus Yngen, Heléne Vibbleus, Peter Sjölander, Erik Olsson, Jacqueline Hoogerbrugge and Rainer Schmückle were re-elected as members of the Board of Directors. The proposed dividend of SEK 2.15 per share was approved.

There have been no other significant events that have impacted financial reporting after the balance sheet date.

RECONCILIATION OF NON-IFRS MEASURES TO IFRS (ALTERNATIVE PERFORMANCE MEASURES)

Dometic presents some financial measures in this interim report, which are not defined by IFRS. The company believes that these measures provide valuable additional information to investors and management for evaluating the company's financial performance, financial position and trends in the company's operations. It should be noted that these measures, as defined, may not be comparable to similarly titled measures used by other companies. These non-IFRS measures should not be considered as substitutes for financial reporting measures prepared in accordance with IFRS. See Dometic's website www. dometic.com for the detailed reconciliation.

Core working capital

Consists of inventories and trade receivables less trade payables.

EBITDA

Operating profit (EBIT) before Depreciation and Amortization. Depreciation also includes Depreciation of Right-of-use assets as of January 1, 2019, when IFRS 16 Leases came into effect.

EBITDA margin

EBITDA divided by net sales.

Leverage

Net debt excluding pensions and accrued interest in relation to EBITDA before items affecting comparability and including acquisitions proforma. Any cash deposits with tax authorities are treated as cash in leverage calculation.

Net debt

Total borrowings including pensions and accrued interest less cash and cash equivalents.

Operating cash flow

Cash flow from operations after investments in fixed assets excluding income tax paid.

Organic growth

Sales growth excluding acquisitions/divestments and currency translation effects. Quarters calculated at comparable currency, applying latest period average rate.

RoOC – Return on Operating Capital

Operating profit (EBIT) divided by operating capital. Based on the operating profit (EBIT) for the four previous quarters, divided by the average operating capital for the previous four quarters, excluding goodwill and trademarks for the previous quarter.

DEFINITIONS AND KEY RATIOS

AM

Aftermarket.

Capital expenditure

Expenses related to the purchase of tangible and intangible assets.

CPV

Commercial and Passenger Vehicles.

EPS – Earnings per share

Net profit for the period divided by average number of shares.

FY 2018

Financial Year ended December 31, 2018.

i.a.c. – items affecting comparability

Items affecting comparability are events or transactions with significant financial effects, which are relevant for understanding the financial performance when comparing profit for the current period with previous periods. Items included are for example restructuring programs, expenses related to major revaluations, gains and losses from acquisitions or disposals of subsidiaries.

Interest-bearing debt

Liabilities to credit institutions plus liabilities to related parties plus provisions for pensions.

LTM

Last twelve months

Net profit

Profit (loss) for the period

OCI

Other Comprehensive Income.

OEM

Original Equipment Manufacturers.

Operating capital

excluding goodwill and trademarks

Interest-bearing debt plus equity less cash and cash equivalents, excluding goodwill and trademarks.

Operating profit (EBIT)

Operating profit (EBIT) before financial items and taxes.

Operating profit (EBIT) margin

Operating profit (EBIT) divided by net sales.

RV

Recreational Vehicles.

Q1 2019

January to March 2019 for Income Statement.

Q1 2018

January to March 2018 for Income Statement.

Working capital

Core working capital plus other current assets less other current liabilities and provisions relating to operations.

YTD 2019 Year to date. January to March 2019 for Income statement.

YTD 2018

Year to date. January to March 2018 for Income statement.

PRESENTATION OF THE INTERIM REPORT

Analysts and media are invited to participate in a telephone conference at 10.00 (CEST), April 26, 2019, during which President and CEO, Juan Vargues and CFO, Per-Arne Blomquist, will present the report and answer questions. To participate in the webcast/telephone conference, please dial in five minutes prior to the start of the conference call:

Sweden: +46 8 505 58 357

UK: +44 333 300 9272

US: +1 646 722 4904

The webcast URL and presentation are available at www.dometic.com

FOR FURTHER INFORMATION, PLEASE CONTACT

Johan Lundin Head of Investor Relations and Communications Phone: +46 8 501 025 46 E-mail: ir@dometicgroup.com

CONTACT DETAILS

Dometic Group AB (publ)

Hemvärnsgatan 15 SE-171 54 Solna, Sweden Phone: +46 8 501 025 00 www.dometic.com Corporate registration number 556829-4390

This information is information that Dometic Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 CEST on April 26, 2019.

This document is a translation of the Swedish version of the interim report. In the event of any discrepancy, the Swedish wording shall prevail.

FINANCIAL CALENDAR

MAY 28, 2019: Capital Markets Day JULY 17, 2019: Interim report for the second quarter 2019 OCTOBER 24, 2019: Interim report for the third quarter 2019

ABOUT DOMETIC

Dometic is a global market leader in branded solutions for mobile living in the areas of Food & Beverage, Climate, Power & Control, Hygiene & Sanitation and Safety & Security. Dometic operates in the Americas, EMEA and APAC, providing products for use in recreational vehicles, pleasure and workboats, trucks and premium cars, and for a variety of other uses. Our motivation is to create smart and reliable products with outstanding design. We have a global distribution and dealer network in place to serve the aftermarket. Dometic employs approximately 8,000 people worldwide, had net sales of SEK 18.0 billion in 2018 and is headquartered in Stockholm, Sweden.

DISCLAIMER

Some statements herein are forward-looking and the actual outcome could be materially different. In addition to the factors explicitly commented upon, the actual outcome could be materially aff ected by other factors, (a) changes in economic, market and competitive conditions, (b) success of business and operating initiatives, (c) changes in the regulatory environment and other government actions, (d) fluctuations in exchange rates and (e) business risk management.