Earnings Release • Feb 8, 2018
Earnings Release
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| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Net sales | 3,252 | 2,786 | 14,044 | 12,388 |
| EBITDA | 280 | 250 | 2,228 | 1,871 |
| % of net sales | 8.6% | 9.0% | 15.9% | 15.1% |
| Operating profit (EBIT) | 191 | 173 | 1,907 | 1,573 |
| % of net sales | 5.9% | 6.2% | 13.6% | 12.7% |
| Operating profit (EBIT) before items affecting comparability | 310 | 210 | 1,860 | 1,621 |
| % of net sales | 9.5% | 7.5% | 13.2% | 13.1% |
| Profit for the period | 277 | 302 | 1,495 | 1,362 |
| Earnings per share, SEK | 0.94 | 1.02 | 5.05 | 4.60 |
| Cash flow for the period | -612 | 435 | -417 | 750 |
| Operating cash flow⁽¹⁾ | 536 | 352 | 1,727 | 1,296 |
| Core working capital | 3,376 | 2,655 | 3,376 | 2,655 |
| Capital expenditure in fixed assets | -88 | -68 | -306 | -225 |
| RoOC | 33.0% | 31.6% | 33.0% | 31.6% |
⁽¹⁾Net cash flow from operations after investments in fixed assets and excluding income tax paid.
(SEK million) 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 0 100 200 300 400 500 600 700 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 Q RT Quarterly EBIT before i.a.c. Rolling 12-month EBIT before i.a.c.
Operating profit (EBIT) before i.a.c
2017 was a good year for Dometic and we saw a positive development in all our main businesses. We have maintained focus on our profitable growth strategy and intensified our efforts on cost control. The EMEA organization launched a profitability program focusing on cost reductions, we have progressed as planned with our manufacturing footprint optimization in APAC and the efforts on logistics and distribution have improved profitability in Americas. Total sales growth for the full year was 13 percent, of which 12 percent was organic and EBIT improved by 15 percent.
Growth in 2017 has primarily been driven by high demand in the RV OEM businesses in Americas and EMEA, where we successfully grew in most product categories and strengthened our market position. Aftermarket developed well, especially in APAC. The acquisition of SeaStar Solutions in December marks an important stepping stone in our ambition to grow within Marine and to complement the RV business. SeaStar Solutions significantly broadens our offering in North America and creates a global platform for further expansion in the marine industry.
We conclude a fourth quarter with strong organic growth in all three regions. The quarter was affected by onetime effects from SeaStar Solutions transaction costs of SEK 58 million, EMEA profitability improvement program costs of SEK 61 million and the reimbursement of incurred legal costs related to the class action cases in Florida and California of SEK 28 million.
Americas reported 24 percent organic growth and strong EBIT growth of 77 percent the fourth quarter. Underlying demand for RV OEM remained strong and for the full year 2017 total shipments of RVs reached record high levels of more than 500 000 vehicles.
EMEA reported 8 percent organic growth and an EBIT margin improvement of 2.0 percentage points in the fourth quarter. Demand for RV OEM was positive in all major European markets and our CPVOEM business grew more than 30 percent.
APAC reported 14 percent organic growth and continued high profitability, although slightly down compared to same quarter 2016. The Aftermarket showed strong development, mainly driven by Retail and RV AM in Australia. EBIT was negatively impacted by product mix and raw material prices.
Global lifestyle trends and the positive economic situation and consumer confidence on main markets create a good foundation for continued growth. We are committed to reach our financial targets. The outlook for our combined businesses remains positive with estimated organic growth in line with our target of 5 percent. With the acquisition of SeaStar Solutions, combined with continued efficiency improvements, we are aiming at reaching our target of 15 percent EBIT-margin during 2018. Leverage is expected to be around 2.5x by the end of 2018. The Board of Directors will propose a dividend payout of SEK 2.05 per share at the annual shareholder"s meeting, corresponding to a payout ratio of 40.6 percent of net profit.
We summarize a strong year and fourth quarter. During my initial period as CEO of Dometic I have met with professional and devoted teams with a true dedication to the business. Together, I am fully convinced that we will take the company to the next level.
Juan Vargues, President and CEO
Net sales totaled SEK 3,252 (2,786) million, an increase of 17% compared to the same quarter the previous year. This is made up of 16% organic growth, -5% currency translation and 6% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 310 (210) million, an increase of 48% compared to the same quarter the previous year. The EBIT margin was 9.5% (7.5%). Earnings include a positive net effect of SEK 17 million relating to the US class action cases, of which SEK 28 million was reimbursement from the insurance company and SEK -11 million was legal costs incurred in the quarter.
Items affecting comparability totaled SEK -119 million related to transaction costs for SeaStar Solutions and the EMEA profitability improvement program.
Financial items amounted to a net of SEK -87 million (-9), including SEK -37 million in interest on external bank loans (-29) and SEK 5 million for revaluation of unrealized exchange result on cash (6). Other FX revaluations and other items amounted to SEK -59 million (13) and financial income to SEK 4 million (1).
Taxes totaled SEK 173 million (138), corresponding to -166% (-84%) of profit before tax. Current tax amounted to SEK -77 million (5) and deferred tax to SEK 250 million (133).The US tax reform affected the valuation of deferred tax assets related to Dometic Group by SEK -20 million and revaluation of deferred tax liabilities related to identified surplus values in the purchase price allocation of SeaStar Solutions by SEK 299 million.
Profit for the quarter totaled SEK 277 million (302).
Earnings per share amounted to SEK 0.94 (1.02).
Operating cash flow totaled SEK 536 million (352). The improvement mainly derives from stronger operating profit and a favorable change in trade payables.
Cash flow for the quarter of SEK -612 million (435) includes costs for the acquisition of SeaStar Solutions of SEK -7,285 million and related financing of SEK 6,260 million.
Financial position. Leverage was 3.3x (1.7) at year-end 2017. At Q3 2017, leverage was 1.3x. Dometic extended its existing credit facility by USD 750 million to finance the acquisition of SeaStar Solutions. Excluding SeaStar Solutions, leverage was 1.0x at year-end 2017.
Net sales totaled SEK 14,044 (12,388) million, an increase of 13% compared to the same period the previous year. This is made up of 12% organic growth, 0% currency translation and 1% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 1,860 (1,621) million, an increase of 15% compared to the same period the previous year. The EBIT margin was 13.2% (13.1%). Earnings include a negative net effect of SEK -70 million relating to rebranding and US class action legal cases.
Items affecting comparability totaled SEK 47 million related to the consolidation of manufacturing in China, transaction costs for SeaStar Solutions and the EMEA profitability improvement program.
Financial items amounted to a net of SEK -206 million (-118), including SEK -112 million in interest on external bank loans (-117) and SEK -16 million for revaluation of unrealized exchange result on cash (1). Other FX revaluations and other items amounted to SEK -85 million (-7) and financial income to SEK 6 million (6).
Taxes totaled SEK -206 million (-93), corresponding to 12% (6%) of profit before tax. Current tax amounted to SEK -218 million (-158) and deferred tax to SEK 12 million (65).
Profit for the period totaled SEK 1,495 million (1,362).
Earnings per share amounted to SEK 5.05 (4.60).
Operating cash flow totaled SEK 1,727 million (1,296). The improvement derives from stronger operating profit and an unfavorable development in trade receivables was more than offset by favorable changes in trade payables and other working capital.
Cash flow for the period of SEK -417 million (750) includes costs of SEK 7,482 million for the acquisitions made during 2017 and related financing of SEK 6,260 million. The cash dividend payout for 2016 of SEK -547 million in Q2 2017 is also included.
Events after the quarter. Juan Vargues, new President and CEO of Dometic, joined the company on January 8, 2018.
| Q4 | Q4 | Change (%) | FY | FY | Change (%) | |||
|---|---|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | Rep. | Adj.⁽¹⁾ | 2017 | 2016 | Rep. | Adj.⁽¹⁾ |
| Americas ⁽³⁾ | 1,511 | 1,256 | 20% | 33% | 6,329 | 5,749 | 10% | 11% |
| EMEA | 1,248 | 1,082 | 15% | 14% | 5,962 | 5,093 | 17% | 15% |
| Asia Pacific | 493 | 448 | 10% | 15% | 1,753 | 1,546 | 13% | 12% |
| Net sales | 3,252 | 2,786 | 17% | 23% | 14,044 | 12,388 | 13% | 13% |
| Americas ⁽³⁾ | 180 | 102 | 77% | 114% | 885 | 756 | 17% | 18% |
| EMEA | 38 | 11 | 251% | 607% | 618 | 534 | 16% | 14% |
| Asia Pacific | 92 | 97 | -5% | 0% | 357 | 331 | 8% | 8% |
| Operating profit (EBIT) bef. i.a.c.⁽²⁾ | 310 | 210 | 48% | 69% | 1,860 | 1,621 | 15% | 15% |
| Americas ⁽³⁾ | 11.9% | 8.1% | 14.0% | 13.1% | ||||
| EMEA | 3.0% | 1.0% | 10.4% | 10.5% | ||||
| Asia Pacific | 18.7% | 21.8% | 20.4% | 21.4% | ||||
| Operating profit % bef. i.a.c.⁽²⁾ | 9.5% | 7.5% | 13.2% | 13.1% |
⁽¹⁾Represents change in comparable currency. ⁽²⁾Before items affecting comparability. ⁽³⁾Including SeaStar Solutions.
OPERATING MARGIN (EBIT%)¹
Americas reported net sales of SEK 1,511 million (1,256), representing 47% of Group sales. Total growth was 20%, of which 24% was organic, -10% currency translation and 6% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 180 million (102); an increase of 77% compared to the same quarter in 2016. The EBIT margin was 11.9% (8.1%).
Net sales amounted to SEK 6,329 million (5,749); an increase of 10%, of which 13% was organic, -1% currency translation and -2% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 885 million (756); an increase of 17% compared to the same period in 2016. The EBIT margin was 14.0% (13.1%).
In the US, growth in the volume of RV shipments from OEM manufacturers to dealers remains strong. For the period January – December 2017, RV shipments increased by 17% to 504,599 units compared with the same period last year. For the October – December period, RV shipments increased by 19% compared to the same period last year.
Total OEM growth was 21%, of which growth in constant currency adjusted for the acquisition of SeaStar Solutions was 27%.
Total Aftermarket growth was 18%, of which growth in constant currency adjusted for the acquisition of SeaStar Solutions was 14%.
RV OEM reported strong sales, with organic growth of 34%. High demand for refrigerators and air conditioners.
The Marine OEM business excluding SeaStar Solutions was slightly down.
CPV OEM business sales declined.
Aftermarket grew, mainly from a good performance in RV and Lodging.
Proceedings related to the class action complaints continue. During the fourth quarter, Dometic reached an agreement with the insurance company, pursuant to which Dometic is reimbursed for a certain portion of its defense costs incurred in 2016-2017 as well as going forward. The positive net effect was SEK 17 million in the quarter, of which SEK 28 million was reimbursement from the insurance company. Dometic remains firm in its position that the allegations in the cases are without merit.
Q4
NET SALES
¹ Before i.a.c.
Fourth quarter 2017
EMEA reported net sales of SEK 1,248 million (1,082), representing 38% of Group sales. Total growth was 15%, of which 8% was organic, 1% currency translation and 6% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 38 million (11); an increase of 251% compared to the same quarter in 2016. The EBIT margin was 3.0% (1.0%).
Net sales amounted to SEK 5,962 million (5,093); an increase of 17%, of which 10% was organic, 1% currency translation and 6% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 618 million (534); an increase of 16% compared to the same period in 2016. The EBIT margin was 10.4% (10.5%).
During the period January – December 2017, RV registrations in the largest European markets, excluding the UK and Spain, increased by 13% to 124,400 units compared with the same period last year. For October – December, RV registrations increased by 17% compared to the same period last year.
For the period January – December, heavy truck registrations increased by 2% compared to the same period last year.
Total OEM growth was 22%, of which growth in constant currency was 21%. Total Aftermarket growth was 5%, of which growth in constant currency was 5%.
RV OEM reported good organic sales growth of 10%. Demand remains positive on key European markets.
Marine OEM reported strong sales growth. Good development in underlying markets and positive impact from the Q1 acquisition of Oceanair.
CPV OEM had strong sales growth. High demand in the passenger vehicle segment and a solid performance in the commercial vehicle segment.
Aftermarket sales grew, mainly due to good performance in Retail, Lodging and RV AM.
During the fourth quarter, costs of SEK -61 million were booked related to the EMEA profitability improvement program.
Q4
NET SALES
SEK MILLION (448)
SEK MILLION (97)
OPERATING MARGIN (EBIT%)¹
¹ Before i.a.c.
APAC reported net sales of SEK 493 million (448), representing 15% of Group sales. Total growth was 10%, of which 14% was organic, -4% currency translation and 0% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 92 million (97); a decrease of -5% compared to the same quarter in 2016. The EBIT margin was 18.7% (21.8%).
Net sales amounted to SEK 1,753 million (1,546); an increase of 13%, of which 12% was organic, 1% currency translation and 0% M&A.
Operating profit (EBIT) before i.a.c. totaled SEK 357 million (331); an increase of 8% compared to the same period in 2016. The EBIT margin was 20.4% (21.4%).
Statistics on Australian domestic RV production showed an increase of 2% to 20,858 units during the January – November, compared to the same period previous year. For the period September – November, RV production increased by 2% compared to the same period last year.
Total OEM growth was 5%, of which growth in constant currency was 10%. Total Aftermarket growth was 14%, of which growth in constant currency was 19%.
RV OEM reported organic sales growth of 3%. Dometic grew on a rather flat underlying market in Australia. Good performance in RV OEM customers in China and Japan.
Marine OEM grew. Overall good performance across the region.
CPV OEM reported very high growth, driven by continued strong sales of inverters to customers in China.
Aftermarket showed strong development. Growth was mainly driven by the Retail and RV business in Australia and Japanese lodging business.
The consolidation of manufacturing in China, announced in the third quarter, is progressing according to plan.
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 Group companies.
For the fourth quarter 2017, the Parent Company had an operating profit of SEK 1 million (0), including administrative expenses of SEK -40 million (-36) and other operating income of SEK 41 million (36), of which the full amount relates to income from Group companies.
Profit (loss) from financial items totaled SEK -237 million (-131), including interest income from Group companies of SEK 15 million (26), interest expenses to Group companies of SEK 0 million (0) and other financial income and expenses of SEK -252 million (-157).
Profit (loss) for the period totaled to SEK -181 million (223).
The Parent Company"s operating profit for the full year totaled SEK -3 million (-3), including administrative expenses of SEK -133 million (-130) and other operating income of SEK 130 million (127), of which the full amount relates to income from Group companies.
Profit (loss) from financial items totaled SEK -28 million (-351), including interest income from Group companies of SEK 50 million (71), interest expenses to Group companies of SEK - million (-) and other financial income and expenses of SEK -77 million (-442).
Profit (loss) for the period totaled SEK -186 million (-1). The loss for the period is due to timing issues related to the process of simplifying the legal structure in Sweden. The loss will be recovered in 2018.
For further information, please refer to the Parent Company"s condensed financial statements on page 12.
Dometic Group"s Annual General Meeting will be held on Tuesday, April 10, 2018, at 13:00 at Meeting Room, Alströmergatan 20, Stockholm, Sweden
In accordance with the resolution taken by the 2017 AGM, the Nomination Committee ahead of the 2018 Annual General Meeting (AGM) shall be composed of the Chairman of the Board of Directors together with one representative of each of the three largest shareholders, based on the ownership structure at September 30, 2017. Further details about the nomination committee are available on our website. www.dometicgroup.com
For the 2017 full year, the Board of Directors proposes a cash dividend of SEK 2.05 (1.85).
Solna, February 8, 2018
Board of Directors
This interim report has not been subject to special review by the Dometic Group AB (publ)"s external auditor.
| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Net sales | 3,252 | 2,786 | 14,044 | 12,388 |
| Cost of goods sold | -2,301 | -1,967 | -9,599 | -8,463 |
| Gross Profit | 951 | 819 | 4,445 | 3,925 |
| Sales expenses | -460 | -421 | -1,791 | -1,651 |
| Administrative expenses | -145 | -183 | -667 | -604 |
| Other operating income and expenses | -12 | 13 | -52 | 20 |
| Items affecting comparability | -119 | -37 | 47 | -48 |
| Amortization of acquisition related intangible assets | ||||
| -24 | -18 | -76 | -69 | |
| Operating profit | 191 | 173 | 1,907 | 1,573 |
| Financial income | 4 | 1 | 6 | 6 |
| Financial expenses | -91 | -10 | -212 | -124 |
| Loss from financial items | -87 | -9 | -206 | -118 |
| Profit before tax | 104 | 164 | 1,700 | 1,455 |
| Taxes | 173 | 138 | -206 | -93 |
| Profit for the period | 277 | 302 | 1,495 | 1,362 |
| Profit for the period attributable to owners of the Parent Company | 277 | 302 | 1,495 | 1,362 |
| Earnings per share before and after dilution effects, SEK - Owners of the Parent Company |
0.94 | 1.02 | 5.05 | 4.60 |
| Number of shares, million | 295.8 | 295.8 | 295.8 | 295.8 |
| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Profit for the period | 277 | 302 | 1,495 | 1,362 |
| Other comprehensive income | ||||
| Items that will not be reclassified subsequently to profit or loss: | ||||
| Remeasurements of defined benefit pension plans, net of tax | 2 | -13 | 0 | -16 |
| 2 | -13 | 0 | -16 | |
| Items that may be reclassified subsequently to profit or loss: | ||||
| Cash flow hedges, net of tax | 23 | 26 | 25 | 13 |
| Gains/losses from hedges of net investments in foreign operations, | ||||
| net of tax | -14 | -50 | 66 | -149 |
| Exchange rate differences on translation of foreign operations | 197 | 289 | -502 | 887 |
| 207 | 265 | -411 | 751 | |
| Other comprehensive income for the period | 209 | 252 | -411 | 735 |
| Total comprehensive income for the period | 486 | 554 | 1,084 | 2,097 |
| Total comprehensive income for the period attributable to owners of the | ||||
| Parent Company | 486 | 554 | 1,084 | 2,097 |
| Dec 31, | Dec 31, | |
|---|---|---|
| SEK million | 2017 | 2016 |
| ASSETS | ||
| Non-current assets | ||
| Goodwill and trademarks | 17,016 | 12,725 |
| Other intangible assets | 4,260 | 1,016 |
| Tangible assets | 1,952 | 1,575 |
| Deferred tax assets | 897 | 1,226 |
| Derivatives, long-term | 1 | 7 |
| Other non-current assets | 65 | 52 |
| Total non-current assets | 24,191 | 16,601 |
| Current assets | ||
| Inventories | 3,350 | 2,637 |
| Trade receivables | 1,485 | 1,041 |
| Current tax assets | 180 | 47 |
| Derivatives, short-term | 90 | 57 |
| Other current assets | 418 | 237 |
| Prepaid expenses and accrued income | 132 | 89 |
| Cash and cash equivalents | 1,159 | 1,599 |
| Total current assets | 6,814 | 5,707 |
| TOTAL ASSETS | 31,005 | 22,308 |
| EQUITY AND LIABILITIES EQUITY |
14,514 | 13,977 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Liabilities to credit institutions, long-term | 9,810 | 4,453 |
| Deferred tax liabilities | 1,901 | 593 |
| Other non current liabilities | 0 | – |
| Provisions for pensions | 687 | 536 |
| Other provisions, long-term | 131 | 117 |
| Total non-current liabilities | 12,529 | 5,699 |
| Current liabilities | ||
| Liabilities to credit institutions, short-term | 733 | 329 |
| Trade payables | 1,459 | 1,024 |
| Current tax liabilities | 371 | 294 |
| Advance payments from customers | 23 | 29 |
| Derivatives, short-term | 45 | 52 |
| Other provisions, short-term | 289 | 197 |
| Other current liabilities | 264 | 134 |
| Accrued expenses and prepaid income | 778 | 573 |
| Total current liabilities | 3,962 | 2,632 |
| TOTAL LIABILITIES | 16,491 | 8,331 |
| TOTAL EQUITY AND LIABILITIES | 31,005 | 22,308 |
| Other paid in | Retained | ||||
|---|---|---|---|---|---|
| SEK million | Share capital | capital ⁽¹⁾ | Reserves | earnings | Total equity |
| Opening balance Jan 1, 2016 | 1 | 11,446 | 1,004 | -568 | 11,883 |
| Profit for the period | 1,362 | 1,362 | |||
| Other comprehensive income | |||||
| Remeasurements of defined benefit pension plans, net of tax | -16 | -16 | |||
| Cash flow hedges, net of tax | 13 | 13 | |||
| Gains/losses from hedges of net investments in foreign operations, net | |||||
| of tax | -149 | -149 | |||
| Exchange rate differences on translation of foreign operations | 887 | 887 | |||
| Total comprehensive income | 751 | 1,346 | 2,097 | ||
| Transactions with owners | |||||
| Costs related to the shareholders´ contribution, net of tax | -3 | -3 | |||
| Total transactions with owners | -3 | -3 | |||
| Closing balance Dec 31, 2016 | 1 | 11,446 | 1,755 | 775 | 13,977 |
⁽¹⁾ Shareholders´contribution reclassified from retained earnings to other paid in capital SEK 11,446 million, has been done as an opening balance sheet adjustment as per January 1, 2016.
| Other paid in | Retained | ||||
|---|---|---|---|---|---|
| SEK million | Share capital | capital ⁽¹⁾ | Reserves | earnings | Total equity |
| Opening balance Jan 1, 2017 | 1 | 11,446 | 1,755 | 775 | 13,977 |
| Profit for the period | 1,495 | 1,495 | |||
| Other comprehensive income | |||||
| Remeasurements of defined benefit pension plans, net of tax | 0 | 0 | |||
| Cash flow hedges, net of tax | 25 | 25 | |||
| Gains/losses from hedges of net investment in foreign operations, net of | |||||
| tax | 66 | 66 | |||
| Exchange rate differences on translation of foreign operations | -502 | -502 | |||
| Total comprehensive income | -411 | 1,495 | 1,084 | ||
| Transactions with owners | |||||
| Dividend to shareholders | -547 | -547 | |||
| Total transactions with owners | -547 | -547 | |||
| Closing balance Dec 31, 2017 | 1 | 11,446 | 1,344 | 1,723 | 14,514 |
| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Cash flow from operations | ||||
| Operating profit | 191 | 173 | 1,907 | 1,573 |
| Adjustment for other non-cash items | ||||
| Depreciation and amortization | 88 | 77 | 321 | 298 |
| Adjustments for other non-cash items | 54 | 22 | -99 | 68 |
| Changes in working capital | ||||
| Changes in inventories | -173 | -139 | -361 | -364 |
| Changes in trade receivables | 391 | 376 | -151 | -83 |
| Changes in trade payables | 70 | -18 | 296 | 43 |
| Changes in other working capital | 3 | -71 | 120 | -14 |
| Income tax paid | -35 | -16 | -105 | -107 |
| Net cash flow from operations | 589 | 404 | 1,928 | 1,414 |
| Cash flow from investments | ||||
| Acquisition of operations | -7,285 | – | -7,482 | – |
| Investments in fixed assets | -88 | -68 | -306 | -225 |
| Proceeds from sale of fixed assets | 0 | 109 | 139 | 133 |
| Other investing activities | -1 | 2 | -4 | – |
| Net cash flow from investments | -7,374 | 43 | -7,653 | -92 |
| Cash flow from financing | ||||
| Shareholders´contribution/Paid costs related to the shareholders´ | ||||
| contribution | – | – | – | -74 |
| Borrowings from credit institutions | 6,260 | 31 | 6,301 | 64 |
| Repayment of loans to credit institutions | – | 0 | -229 | -426 |
| Paid interest | -24 | -28 | -99 | -97 |
| Received interest | 3 | 1 | 5 | 3 |
| Other financing activities | -67 | -16 | -122 | -42 |
| Dividend | – | – | -547 | – |
| Net cash flow from financing | 6,173 | -12 | 5,308 | -572 |
| Cash flow for the period | -612 | 435 | -417 | 750 |
| Cash and cash equivalents at beginning of period | 1,763 | 1,160 | 1,599 | 833 |
| Exchange differences on cash and cash equivalents | 8 | 4 | -23 | 16 |
| Cash and cash equivalents at end of period | 1,159 | 1,599 | 1,159 | 1,599 |
| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Administrative expenses | -40 | -36 | -133 | -130 |
| Other operating income | 41 | 36 | 130 | 127 |
| Operating profit | 1 | 0 | -3 | -3 |
| Interest income subsidiaries | 15 | 26 | 50 | 71 |
| Interest expenses subsidiaries | 0 | 0 | – | – |
| Other financial income and expenses | -252 | -157 | -77 | -422 |
| Profit (loss) from financial items | -237 | -131 | -28 | -351 |
| Group contributions | 53 | 353 | -157 | 353 |
| Profit (loss) before tax | -183 | 222 | -188 | -1 |
| Taxes | 2 | 1 | 2 | 0 |
| Profit (loss) for the period | -181 | 223 | -186 | -1 |
| Dec 31, | Dec 31, | |
|---|---|---|
| SEK million | 2017 | 2016 |
| ASSETS | ||
| Shares in subsidiaries | 16,622 | 13,563 |
| Other non-current assets | 5,117 | 17 |
| Total non-current assets | 21,738 | 13,580 |
| Current assets | 893 | 2,745 |
| TOTAL ASSETS | 22,631 | 16,325 |
| EQUITY | 10,845 | 11,579 |
| PROVISIONS | ||
| Provisions | 27 | 13 |
| Total provisions | 27 | 13 |
| LIABILITIES | ||
| Non-current liabilities | 9,810 | 4,453 |
| Total non-current liabilities | 9,810 | 4,453 |
| Current liabilities | 1,949 | 280 |
| Total current liabilities | 1,949 | 280 |
| TOTAL EQUITY AND LIABILITIES | 22,631 | 16,325 |
Dometic Group AB (publ) ("Dometic") 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 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 1-16 and pages 1-7 are thus an integrated part of this financial report (IAS 34.16A).
The accounting principles applied correspond to those described in the 2016 Annual Report. There are no changes to Dometic"s accounting and valuation principles compared to the principles described in Notes 2 and 4 of the 2016 Annual Report. For a detailed description of the accounting and valuation principles applied by the Group, see Notes 1, 2 and 4 of the 2016 Annual Report, available at www.dometic.com.
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.
The following information should be considered in addition to the description of the new accounting standards and related activities provided in the 2016 Annual Report, Note 2.
IFRS 15 Revenue from Contracts with Customers establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity"s contracts with customers. The standard replaces IAS 11 Construction Contracts and IAS 18 Revenue. The Group has assessed the possible impact on the Group"s financial statements of the implementation of IFRS15, Revenue from Contracts with Customers. The investigation, training and implementation processes are closed and we can conclude that at transition neither the amount of revenue nor the timing will be impacted to any significant extent.
Our business offers mainly contracted or off-the-shelf finished products via purchase orders. An insignificant part of Group external sales constitutes a mix of customized products and services in bundled agreements why the guidance about identifying distinct performance obligations and allocating the transaction price in a contract has not lead to any material adjustments compared to the present revenue accounting. Revenue from variable consideration, mainly various discounts, has under current practice been considered in a comparable way to IFRS 15 which is why the revenue pattern in this aspect will also be similar under the new standard. Long-term contracts are rare in the Group. There are no elements of financing components in the present contracts in the Group, as sales are normally made with a credit term of 30–60 days.
Thus, as already stated in the 2016 Annual Report, the application of the new Revenue from Contracts with Customers IFRS 15 standard will not have any material impact on the financial position and performance of the Group at the date of transition. Therefore there are no material transition effects to be disclosed.
The Group is now prepared to start applying the new standard on the effective date January 1, 2018.
Dometic Group has chosen the full retrospective transition method.
IFRS 9 Financial instruments, will replace the earlier IAS 39 Financial instruments. IFRS 9 provides new guidance for the classification and valuation of financial instruments, a new credit loss matrix model for calculation of impairment of financial assets and new guidance for hedge accounting. The accounting of derivatives and hedge accounting in Dometic Group will stay unchanged, since IFRS 9 is in accordance with the existing IAS 39, i.e. recognized at fair value through profit and loss statement, which is why the Group will not be impacted.
The Group"s work to develop and implement the new expected credit loss model has been completed. As expected and described in the 2016 Annual report there will be an impact on Dometic"s financial reporting. However, even with a changed model and policy the now concluded and calculated effect is immaterial. The expected credit loss model includes estimates and assumptions about the future. A thorough analysis has to be done in the closings. Credit losses have historically been at a low level in the Group.
The standard IFRS 9 is effective as of January 1, 2018.
IFRS 16 was issued in January 2016 and will replace IAS 17 Leases and related interpretations IFRIC 4, SIC-15, and SIC-27. The new standard will have an impact on the lessee accounting, but the accounting for lessors will in all material aspects remain unchanged. With the new standard there will be no difference between operational and financial leases. The standard requires that all lease agreements other than short-term leases or "lowvalue" leases be accounted for in the balance sheet, i.e. similar to today"s financing leases. Dometic Group has operational leases, such as office premises, production and warehouse space, IT and office equipment.
Currently, Dometic is assessing the impact of the new standard. On-going activities include further analysis of lease terms in agreements. Indications so far in the investigation phase, where contracts have been gathered and analyzed at a high level, are that some impact is expected on the financial reporting from 2019. Note 8 discloses the future cash flows for today"s operating leases. Depending on the final analysis made of the majority of these cash flows, discounted to present value, the Group will see an increase of the assets and liabilities in the balance sheet.
The Group is not able to quantify the impact on financial consolidated statements at this stage of the project. Dometic Group is also evaluating various system solutions to achieve a stable support to the financial reporting from 2019 and onwards.
The transition method has not yet been decided on. The standard is effective as of January 1, 2019. Dometic Group will not apply earlier adaption.
As all businesses, Dometic is exposed to a number of risks that could have a material impact on the Group. These risks are factors that impact Dometic"s ability to achieve established
Group targets. This applies to both financial targets and targets in other areas outlined in Dometic"s business strategy. Dometic performs an annual risk analysis by assessing each defined risk"s likelihood and impact in a risk register, resulting in global and regional risk maps presented to Group management and the Board of Directors and used as a foundation for the control activities within Dometic. The risks that Dometic is exposed to are classified into four main categories (business and market risks, operational risks, compliance and regulatory risks and financial risks) where each category has underlying risks. These risks can be both internal and external. Internal risks are mainly managed and controlled by Dometic whereas external risk factors are not caused nor can be controlled by Dometic but the effects can be limited by an effective risk management.
Dometic is subject to transaction risks at the time of purchasing and selling, as well as when conducting financial transactions.
Transaction exposure is primarily related to the currencies EUR, USD and AUD. As the majority of the Group"s profit is generated outside Sweden, the Group is also exposed to translational risks in all the major currencies.
Efficient risk management is a continual process conducted within the framework of business control, and is part of the ongoing review of operations and forward-looking assessment of operations. In the preparation of financial reports, the Board of Directors and Group management are required to make
estimates and judgments. These estimates and judgments impact the income statement and balance sheet, as well as the disclosures. The actual outcome may differ from these estimates and judgments under different circumstances and conditions.
Dometic"s future risk exposure is assumed not to deviate from the inherent exposure associated with Dometic"s ongoing business operations. For a more in-depth analysis of risks and risk management, please refer to Dometic"s 2016 Annual Report.
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. Valuation principles and principles for hedge accounting, as described in Note 3 of the 2016 Annual Report, have been applied throughout the reporting period.
The fair value of Dometic"s derivative asset and liabilities were SEK 91 million (Q4 2016: SEK 64 million) and SEK 45 million, (Q4 2016: SEK 52 million).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.
| Dec 31, 2017 | Balance sheet carrying amount |
Financial instruments at amortized cost |
Financial instruments at fair value |
Derivatives used for hedging |
|---|---|---|---|---|
| Per category | ||||
| Derivatives | 91 | – | 11 | 80 |
| Financial assets | 3,127 | 3,127 | – | – |
| Total financial assets | 3,218 | 3,127 | 11 | 80 |
| Derivatives | 45 | – | 9 | 36 |
| Financial liabilities | 12,266 | 12,266 | – | – |
| Total financial liabilities | 12,311 | 12,266 | 9 | 36 |
| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Net sales, external | ||||
| Americas ⁽¹⁾ | 1,511 | 1,256 | 6,329 | 5,749 |
| EMEA | 1,248 | 1,082 | 5,962 | 5,093 |
| Asia Pacific | 493 | 448 | 1,753 | 1,546 |
| Total net sales, external | 3,252 | 2,786 | 14,044 | 12,388 |
| Operating profit (EBIT) | ||||
| Americas ⁽¹⁾ | 122 | 76 | 827 | 698 |
| EMEA | -23 | 6 | 557 | 550 |
| Asia Pacific | 92 | 91 | 523 | 325 |
| Total operating profit (EBIT) | 191 | 173 | 1,907 | 1,573 |
| Financial income | 4 | 1 | 6 | 6 |
| Financial expenses | -91 | -10 | -212 | -124 |
| Taxes | 173 | 138 | -206 | -93 |
| Profit for the period | 277 | 302 | 1,495 | 1,362 |
⁽¹⁾Including SeaStar Solutions.
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 Linjal tabell helsida, 100% upplösning
is based on the integrated result in each segment. For further information, please refer to Note 5 of the 2016 Annual Report.
| Q4 | Q4 | FY | FY | |
|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 |
| Relocation China | – | – | 166 | – |
| Acquistion related costs Seastar Solutions | -58 | – | -58 | – |
| EMEA Profitability program | -61 | – | -61 | – |
| Divestment seating and chassis business | – | -25 | – | -25 |
| Phase out of Architectural products | – | -1 | – | -25 |
| Integration Atwood/Consolidation Americas | – | – | – | -7 |
| Filokovo fire-related costs and insurance settlement | – | -5 | – | 16 |
| Costs for close down of plant in China | – | -6 | – | -6 |
| Other costs | – | – | – | -1 |
| Total | -119 | -37 | 47 | -48 |
No transactions between Dometic and related parties that have significantly affected the company"s position and earnings took place during 2017.
Acquisition of SeaStar Solutions
On November 22, 2017, Dometic announced the acquisition of SeaStar Solutions, leading provider of vessel control, fuel and system integration systems to the leisure marine industry. SeaStar Solutions is based in North America and employs 1,250 people. The transaction was closed on December 15, 2017 after all approvals from relevant competition authorities was obtained, and Dometic has consolidated the company as of that date. The total cash purchase price amounted to USD 868 million (SEK 7,785 million). In the purchase price allocation below, calculations of intangible assets and goodwill are only preliminary. Goodwill is justified by new potential customers and new future technologies with SeaStar Solution"s leading position
in vessel control, fuel systems and system integration and strong relationships with manufacturers. Transaction costs amount to SEK 58 million reported as items affecting comparability in Q4 2017. Sales and cost synergies of USD 20 million per annum will be fully realized within 3 years. The acquisition has affected consolidated net sales from the date of the acquisition by SEK 108 million and operating profit by SEK 5 million, including stepup costs for fair value revaluation of inventory of SEK 9 million. If the acquisition had been consolidated as of January 1, 2017, the effect on pro forma net sales would have been USD 322 million and EBITDA of USD 85 million.
While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, the purchase price allocation for acquisition is preliminary for up to 12 months after the acquisition date and is subject to refinement as more detailed analyses are completed and additional information about the fair values of the assets and liabilities becomes available.
Juan Vargues, new President and CEO of Dometic, joined the company on January 8, 2018. Purchase price allocation Seastar Solutions, SEK million Preliminary Trademarkes and tradenames 1,376 Other intangible assets 3,365 Tangible assets 347 Other non-current assets 1 Operating assets 937 Cash and cash equivalents 1 Provisions and other non-current liabilities -1,777 Operating liabilities -251 Fair value of net assets 3,999 Goodwill 3,361 Consideration 7,360 Consideration transferred -7,286 Cash and cash equivalents in acquired company 1 Cashflow effect on Group's cash and cash equivalents at the acquisition -7,285
On December 22, 2016, Dometic announced the acquisition of the assets of IPV, a Germany-based aftermarket provider of coolers and other outdoor products. The acquisition strengthens Dometic"s position in the EMEA market for mobile coolers. The purchase price was EUR 3.5 million, and the transaction was closed on January 3, 2017.
On February 7, 2017, Dometic acquired Oceanair Marine Limited, a UK-based market-leading manufacturer of marine blinds, screens and soft furnishings for the Leisure Marine and Super Yacht segments. The acquisition strengthens Dometic"s presence in the marine market and broadens the product portfolio. The company reported revenues of GBP 11.4 million for the 2015/2016 fiscal year. The initial purchase price was GBP 14.0 million in cash, with an additional earn-out consideration of a maximum of GBP 2.5 million subject to the achievement of certain performance-related targets over the next 16 months.
The summary of value adjustments recognized as a result of the acquisition of Oceanair amounts in total to SEK 160 million, including goodwill of SEK 80 million, other intangible assets (trademarks and customer relationships) of SEK 100 million, and a deferred tax liability of SEK 20 million. Acquisition-related costs expensed in the consolidated income statement remain the same as in Q1 2017, SEK 2.5 million.
The total purchase price consideration in cash for the transactions (IPV, Oceanair), less cash and cash equivalents, amounts to SEK 197 million, including earn-out paid in Q3. The acquisitions did not have any significant impact on operating profit for the first nine months of 2017.
As announced on July 13, Dometic divested an industrial facility in China as part of a strategic consolidation. The selling price amounted to CNY 160 million. A net gain before tax of CNY 131.5 million is recognized in the third quarter 2017
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 our 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.
Consists of inventories and trade receivables less trade payables.
Earnings before Interest, Taxes, Depreciation and Amortization
EBITDA margin
EBITDA divided by net sales
Net debt excluding pensions and accrued interest in relation to EBITDA.
Total borrowings including pensions and accrued interest less cash and cash equivalents.
EBITDA +/- change in working capital excluding paid tax, after capital expenditure.
Sales growth excluding acquisitions/divestments and currency translation effects. Quarters calculated at comparable currency, applying latest period average rate.
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
Aftermarket.
Expenses related to the purchase of tangible and intangible assets.
Commercial and Passenger Vehicles.
Net profit for the period divided by average number of shares.
Financial Year ended December 31, 2017.
Represents income and expenses related to non-recurring events, occurring on an irregular basis and affecting comparability between the periods.
Liabilities to credit institutions plus liabilities to related parties plus provisions for pensions.
Profit for the period
Other comprehensive income.
OEM Original Equipment Manufacturers.
excluding goodwill and trademarks Interest-bearing debt plus equity less cash and cash equivalents, excluding goodwill and trademarks.
Operating profit; earnings before financial items and taxes.
Operating profit divided by net sales.
Recreational Vehicles.
October to December 2017 for Income Statement.
October to December 2016 for Income Statement.
Core working capital plus other current assets less other current liabilities and provisions relating to operations.
Analysts and media are invited to participate in a telephone conference at 10.00 (CEST), today, February 8, 2018, 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 8 566 426 69 |
|---|---|
| UK: | +44 20 300 898 02 |
| US: | +1 855 753 2235 |
Webcast URL and presentation are available at www.dometic.com
Johan Lundin Head of Investor Relations and Communications Phone: +46 8 501 025 46 E-mail: [email protected]
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 CET on February 8, 2018.
Hemvärnsgatan 15 SE-171 54 Solna, Sweden Phone: +46 8 501 025 00 www.dometic.com Corporate registration number 556829-4390
Dometic is a global market leader in branded solutions for mobile living in the areas of Climate, Hygiene & Sanitation and Food & Beverage. Dometic operates in the Americas, EMEA and Asia Pacific, providing products for use in recreational vehicles, trucks and premium cars, pleasure and workboats, and for a variety of other uses. Dometic offers products and solutions that enrich people"s experiences away from home, whether in a motorhome, caravan, boat or truck. Our motivation is to create smart and reliable products with outstanding design. We operate 28 manufacturing/assembly sites in nine countries, sell our products in approximately 100 countries and manufacture approximately 85% of products sold in-house. We have a global distribution and dealer network in place to serve the aftermarket. Dometic employs approximately 8,200 people worldwide, had net sales of SEK 14.0 billion in 2017 and is headquartered in Stockholm, Sweden.
This document is a translation of the Swedish version of the interim report. In the event of any discrepancy, the Swedish wording shall prevail.
| 10 APRIL 2018: Annual General Meeting |
|---|
| 26 APRIL 2018: Interim report for the first quarter 2018 |
| 18 JULY 2018: Interim report for the second quarter 2018 |
| 25 OCTOBER 2018: Interim report for the third quarter 2018 |
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