Dometic Group Ab · OMXSTO:DOM
Dometic Group Ab — Investor Day (November 2021)
53 slides from Dometic Group Ab's investor day presentation, Nov 30, 2021
Slide 1: Dometic
Slide 2: Disclaimer
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 AFFECTED BY OTHER FACTORS, (A) CHANGES IN ECONOMIC, MARKET AND COMPETITIVE CONDITIONS, (B) SUCCESS
Slide 3: Product Leadership Through Innovation
PRODUCT LEADERSHIP THROUGH INNOVATION ANTON LUNDQVIST
Slide 4: Where We Were
WHERE WE WERE! PRODUCT LOCAL PRODUCT SMALL FRAGMENTATION DEVELOPMENT PROJECTS FEW COMMON LIMITED GLOBAL PROCESSES AGENDA
Slide 5: From - To: Focused Development Organization
FROM - TO FOCUSED DEVELOPMENT ORGANIZATION LOCAL DECISIONS WITH GLOBALLY FOCUSED LITTLE CO-ORDINATION ORGANIZATION
Slide 6: From - To: Global Product Management
FROM - TO GLOBAL PRODUCT MANAGEMENT REGIONAL PRODUCT MANAGEMENT GLOBAL PRODUCT AREAS WITH WITH DIFFERENT DEFINITIONS AND LEADERSHIP IN THE SEGMENTS RESPONSIBILITY APAC AMERICAS EMEA GLOBAL CLIMATE & COMFORT FOOD & BEVERAGE POWER & CONTROL HYGIENE & SANITATION
Slide 7: From - To: More Time Spent on Product Development
FROM - TO MORE TIME SPENT ON PRODUCT DEVELOPMENT 2% 1% 4% 1% 67% 47% 50% 33% NEW PRODUCT DEVELOPMENT CUSTOMER ORDERS MAINTENANCE/IMPROVEMENTS PRIMARY DEVELOPMENT
Slide 8: From - To: Step Change in Innovation Index
FROM - TO STEP CHANGE IN INNOVATION INDEX* Target 30% 30% 25% 25% 25% 20% 20% 15% 15% 26% 24% 23% 21% 22% 10% 10% 18% 18% 16% 16% 16% 14% 15% 13% 12% 13% 12% 12% 11% 11% 13% 5% 9% 10% 10% 9% 5% 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 0% 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 Q4 Q
Slide 9: From - To: Global Platforms and Connectivity
FROM - TO GLOBAL PLATFORMS CONNECTIVITY PREPARED NEW APPLICATIONS AND MARKETS MAINTAINE TECHNICAL LEADERSHIP NEW AQUISITIONS
Slide 10: What We Set Out to Do. What We Did!
WHAT WE SET OUT TO DO. WHAT WE DID!
Slide 11: Open the World
OPEN THE WORLD “> DOMETIC
Slide 12: Outdoor Vehicle Based Activities
OUTDOOR VEHICLE BASED ACTIVITIES Maintain excellence and grow market in core categories with an attractive offering that can also reach new customer categories ▪ Mobile Cooling Solutions ▪ Mobile Cooking Solutions ▪ Mobile Power Solutions ▪ Mobile Storage and Rest Solutions
Slide 13: Heating, Ventilation and A/C for RVs
HEATING, VENTILATION AND A/C FOR RV´S OUR LARGEST PROGRAM – EVER! CONNECTIVITY Variable speed, reduced energy consumption and PREPARED noise Fast heat up New functionality Active heat exchanger Low energy consumption to save energy and Improved experience improve air quality Improved performance Red
Slide 14: Outdoor and Electrification
OUTDOOR AND ELECTRIFICATION Electrification of vehicles will bring changes – Energy flexibility – Energy efficiency – More flexible product solutions for smaller vehicles Dometic opportunities ▪ Mobile Power Solutions Batteries, solar panels and Power Electronics ▪ Existing product range: Variable s
Slide 15: Sustainability
SUSTAINABILITY Sustainability is efficiency VARIABLE SPEED A/C Up to Silent and efficient 40% less – Reduce climate impact current – Increase resource efficiency draw – Improve circularity An integrated part of all we do – every day MINIBAR PLATFORM ▪ Internal ambition levels in all projects 3 cooli
Slide 16: Sustainability: Renewable and Recycled Materials
SUSTAINABILITY RENEWABLE & RECYCLED MATERIALS A first step towards ▪ More opportunities together with IGLOO circularity ▪ Increased focus as we are becoming more consumer oriented ▪ Packages and Products as part of circularity focus
Slide 17: Service and Aftermarket
SERVICE AND AFTERMARKET The opportunity INSTALLATION – Improve the experience – Sustainability through circularity REPLACEMENT – New product opportunities Integrated in our development ▪ Ensure backward compatibility ▪ Find opportunities in the installed base ▪ Work with competitors products ▪ Integ
Slide 18: Three Key Takeaways: Innovation
THREE KEY TAKEAWAYS INNOVATION Step change in innovation and added opportunities to drive more innovation and continue to reduce complexity Outdoor – Vehicle Based Activity products with special focus on mobile power solutions Sustainability with lifecycle focus
Slide 19: Continuous Cost Reductions
CONTINUOUS COST REDUCTIONS EVA KARLSSON
Slide 20: Develop Operation in Steps
DEVELOP OPERATION IN STEPS REDUCE COMPLEXITY STEP 1 REDUCE COMPLEXITY STEP 2 OPTIMIZATION SOURCING SKU REDUCTION EXCELLENCE CATEGORY SUPPLY CHAIN MANAGEMENT EXCELLENCE VALUE ANALYSIS/ TRANSFER SUPPLIERS OUTSOURCING VALUE ENGINEERING FROM HCC TO LCC NON-CORE PRODUCTION LEAN SUPPLIER CONSOLIDATE SITES
Slide 21: Process Owners in Operations Driving Industrialization
PROCESS OWNERS IN OPERATIONS DRIVING THE INDUSTRIALIZATION ACROSS THE SEGMENTS DECENTRALIZATION WITH COORDINATION GROUP COMMON FUNCTIONS APAC AMERICAS EMEA GLOBAL WITHIN OPERATIONS OPERATION OPERATION OPERATION OPERATION SOURCING SUPPLY CHAIN INDUSTRIAL ENGINEERING QUALITY
Slide 22: Complexity in Our Product Offering Is Reduced
COMPLEXITY IN OUR PRODUCT OFFERING IS REDUCED 200,000 TARGET: 180,000 160,000 - 40% SKU REDUCTION 140,000 Sales 2018 120,000 30K 100,000 SKU 97.5% 44K OF SALES YTD 2021: SKU 2.5% 80,000 60,000 OF SALES - 59% SKU REDUCTION 40,000 20,000 0 SKU *SKU = Stock keeping unit *Acquisitions 2021 not included
Slide 23: SKU Reduction in Phases
SKU REDUCTION IN 2 PHASES PHASE 1 – CUT THE TAIL! PHASE 2 – STRUCTURAL REDUCTION ▪ Common processes ▪ Global products ~ 90% ▪ Global technologies done ▪ Generation planning, common component platforms and modularity ▪ Robust product lifecycle management SKU
Slide 24: Advantages from SKU Reduction
ADVANTAGES FROM SKU REDUCTION SUSTAINABILITY EXCELLENCE FEWER FEWER LESS SUPPLIERS COMPONENTS SPACE REDUCED REDUCED RISK OF INVENTORY OBSOLESCENCE
Slide 25: Strategic Sourcing Started
STRATEGIC SOURCING STARTED - 6 PROCESS OWNERS COORDINATING ACROSS THE GROUP AMERICAS EMEA APAC GLOBAL SOURCING SOURCING SOURCING SOURCING SOURCING TOLLGATE SUPPLIER QUALITY & AUDIT VA/VE* INITIATIVE PIPELINE MGMT PERFORMANCE FOLLOW UP CATEGORY MANAGEMENT * VA/VE = Value added/Value Engineering
Slide 26: Fewer and Better Direct Material Suppliers
FEWER AND BETTER DIRECT MATERIAL SUPPLIERS Spend/Supplier (Ksek) 200,000 180,000 Consolidate 160,000 140,000 120,000 80% of spend through Category 100,000 Management 80,000 Cut the Tail To reduce 60,000 complexity cost and risk 40,000 20,000 0
Slide 27: Supplier Reduction Started
SUPPLIER REDUCTION STARTED Target -50% # of suppliers 2021 YTD MSEK/supplier 4 500 -27% 4.5 4 000 4.0 3 500 3.5 3 000 3.0 2 500 2.5 2 000 2.0 1 500 1.5 1 000 1.0 500 0.5 0.0 2018 2019 2020 2021 2021Aug YTD 2021 2022 2023 Baseline Actual YTD Target Spend (MSEK) per supplier *Acquisitions 2021 not inc
Slide 28: Category Management, the Way to Consolidate
CATEGORY MANAGEMENT, THE WAY TO CONSOLIDATE - 5 CATEGORY MANAGERS COORDINATING ACROSS THE GROUP AMERICAS EMEA APAC GLOBAL SOURCING SOURCING SOURCING SOURCING ELECTRONIC COMPRESSOR METAL & MECHANICS PLASTIC & CHEMICALS FINISHED GOODS
Slide 29: Direct Material in Low Cost Countries Share to Be >80%
DIRECT MATERIAL IN LOW COST COUNTRIES (LCC) SHARE TO BE > 80% 90% +13% 80% 80% We have strengthened our 70% Sourcing Organization in 70% 65% Low Cost Countries 61% 63% 60% 55% 50% 50% 40% Share of Sourcing 30% Headcount in Low Cost 20% Countries moved from 30% to 64% 10% 0% 2018 2019 2020 2021 YTD 2
Slide 30: Our Manufacturing Footprint Strategy
OUR MANUFACTURING FOOTPRINT STRATEGY LOW COMPONENT VARIETY HIGH PRODUCT VARIETY MODULE REGIONAL LOCAL FACTORIES ASSEMBLY PLANTS CUSTOMERS COMMON LCC SUPPLIER: REGIONAL LOW COST MODULES & COUNTRY SUPPLIERS COMPONENTS LOGISTIC NETWORK
Slide 31: Restructuring Program Launched Q3 2019
RESTRUCTURING PROGRAM LAUNCHED Q3 2019 Site: ▪ 22 sites affected so far Employees ▪ 804 employees affected so far Costs ▪ SEK 283 m so far vs target 750 m Savings ▪ SEK 150 m so far vs target 400 m ▪ COVID-19 related travel restrictions combined with strong market demand has slowed down some project
Slide 32: Good Progress in All Sustainability KPIs
GOOD PROGRESS IN ALL SUSTAINABILITY KPI’S Workplace injury rate LTIFR % waste recycled 3.7 80 2.8 76 2.4 68 Target 2030 Dec 2018 Dec 2020 Sept 2021 Dec 2018 Dec 2020 Aug 2021 Reduce CO2 emissons* / SEKm by % audited spend in LCC 81 % CO2 ton / net sales SEKm 2,0 50% 78 1.7 Sept 2020 Sept 2021 Dec 20
Slide 33: Result So Far Complexity and Cost Reduction
RESULT SO FAR COMPLEXITY & COST REDUCTION LCC DIRECT RESTRUCTURING SKU SUPPLIER # OF SITES PROGRAM: MATERIAL REDUCTION: REDUCTION: REDUCTION: SHARE: AMBITION 400 40% 50% 15% 80% MSEK ANNUAL SAVING STATUS YTD 2021 vs 59% 27% 22% 63% 150 MSEK 2018 (+13pp)
Slide 34: Three Key Takeaways: Cost Reduction
THREE KEY TAKEAWAYS COST REDUCTION Good Progress in Complexity reduction, will never end Cost reduction program one third done and full focus to complete Good progress on sustainability. Will continue to be part of everything we do.
Slide 35: Financial Update and Targets
FINANCIAL UPDATE AND TARGETS STEFAN FRISTEDT
Slide 36: Financial Trends Overview
FINANCIAL TRENDS OVERVIEW Net sales EBIT Operating Cash Flow 25 000 5 000 114% 120% 5 000 14.7% 14.5% 16% 13.2% 13.2% 14% 91% 20 000 12.0% 87% 100% 4 000 4 000 84% 12% 80% 15 000 3 000 10% 3 000 57% 8% 60% 10 000 2 000 6% 2 000 40% 4% 5 000 1 000 1 000 20% 2% - 0% - 0% - 2017 2018 2019 2020 2021 (Q3
Slide 37: Seasonality and Business Mix
SEASONALITY AND BUSINESS MIX ▪ Expansion in Outdoor and Service and EBIT Margin Before i.a.c. Aftermarket will reduce cyclicality Average 2015-20211 ▪ Dometic business will continue to be seasonal - quarterly margin impacted by sales and 16.7% business mix Q4 Q1 14.0% 13.5% 22% 25% Average 2015-2021
Slide 38: Expansion in Outdoor and Service & Aftermarket
EXPANSION IN OUTDOOR AND SERVICE & AFTERMARKET REDUCED CYCLICALITY AND HIGHER MARGINS Sales Growth by Sales Channel 40% EBIT Margin by sales channel (illustrative) 30% − Service and Aftermarket 20% − Distribution 10% − Dometic Average 0% 2014 2015 2016 2017 2018 2019 2020 2021 09 − Total OEM LTM -10
Slide 39: Tracking Towards Our Financial Targets
TRACKING TOWARDS OUR FINANCIAL TARGETS UNDERLYING IMPROVEMENTS DRIVEN BY STRATEGIC ACTIONS -1.7% +3.2% 14.5% 13.0% Strategic investments in Driven -B2C 11.3% by organic -Outdoor Stronger growth and acquisitive 1/3 of -Other Global SEK -187 m in Distribution, sales growth program Verticals Service &
Slide 40: Net Debt Leverage
NET DEBT LEVERAGE TARGET AROUND 2.5X OVER A BUSINESS CYCLE June Net Debt Leverage ▪ New shares issue SEK 3.4 b ▪ EKN loan SEK 2 b prolonged with 2 years September ▪ Issued 7-year Bond EUR 300 m Going forward 3.3 ▪ Igloo and Cadac adds ~1.3x in Q4 2021 2.8 3.0 2.9 2.8 3.1 2.8 2.7 ▪ Average annual de-
Slide 41: Healthy Debt Maturity Profile
HEALTHY DEBT MATURITY PROFILE ▪ Average maturity 4.3 years Debt Maturity Profile, SEK m ▪ Compared to 2.6 years in 2018 5 ▪ Average interest rate 2.34% ▪ New 7-year bond issued Sep 2021, rate 2,00% 4 2.000 Diversified funding facilities in place 3 ▪ EMTN program EUR 1,500 m (60% used) ▪ Undrawn revo
Slide 42: Working Capital
WORKING CAPITAL WORKING CAPITAL AMBITION – 20% OF NET SALES ▪ 2021 impacted by volume-driven working capital Working Capital build up and by supply chain constraints 7,000 24% 25% 22% 22% 21% ▪ Ongoing activities to reduce Working Capital 5,000 20% ‒ Strategy to focus on lower vertical integration a
Slide 43: Introducing EBITA
INTRODUCING EBITA DOMETIC MARGIN TARGET – EBITA BEFORE I.A.C. 18-19% ▪ Changed profit margin measurement 16-17% EBIT corresponds to 18-19% EBITA ▪ EBITA – better aligned with our strategic agenda ▪ Amortization of intangible assets fluctuates due to various life times assumed in the PPA’s ▪ EBITA gi
Slide 44: Long Term EBITA Target
LONG TERM EBITA TARGET TO BE REALIZED WITHIN A BUSINESS CYCLE ▪ Amortization +1.6% +3.4% ▪ ~1,6% of sales 2021 09 LTM EBITA ▪ 2022 estimate ~SEK 0.5-0.6 b. 18-19% ▪ Igloo improvements EBIT 16.1% ▪ Increased prices to offset rising resin costs 14.5% 14.6% ▪ Synergies of USD 53 m ▪ Cost reduction ▪ SE
Slide 45: Igloo Financials
IGLOO FINANCIALS AMBITION: EBITA MARGIN >15% WITHIN 5 YEARS Synergies USD 53 m. Transaction closed October 26 ‒ Seasonal business, ~14% of annual sales in Q4 Cost synergies 2021 Q3 LTM sales LTM USD 411 m. (+21%) ‒ Stable sales growth of 6% CAGR 2007-2021 Igloo standalone improvements 2021 Q3 LTM EB
Slide 46: Financial Targets Over a Business Cycle
FINANCIAL TARGETS OVER A BUSINESS CYCLE BUSINESS CYCLE ~5 YEARS ▪ Average annual growth NET SALES GROWTH ▪10% including organic growth and M&A EBITA MARGIN ▪18-19% ▪ EBITA margin of 18-19% To be achieved within a business cycle NET DEBT / EBITDA ▪2.5x ▪ Net debt/EBITDA of around 2.5x DIVIDEND POLICY
Slide 47: Capital Allocation Principles
CAPITAL ALLOCATION PRINCIPLES SUPPORT LONG TERM VALUE CREATION 2019 – 20211 AMBITION SEK 0.9 b. Digitalization and Igloo related investments, CAPEX 2-3% of sales partly offset by manufacturing outsourcing 1.7% of sales SEK 1.0 b. Support innovation agenda to drive R&D 2-3% of sales growth and effici
Slide 48: Entering 2022
ENTERING 2022 CONTINUED STRATEGY EXECUTION FOR MARKET AND INDUSTRY LONG-TERM VALUE CREATION 2022 SHORT TERM ACTIVITIES Drive growth in strategic areas Retail inventories low PROFITABLE EXPANSION Balance market demand with supply IN MOBILE LIVING capacity Raw material and transport constraints Increa
Slide 49: Three Key Takeaways: Financial Update and Targets
THREE KEY TAKEAWAYS FINANCIAL UPDATE AND TARGETS Our financial results show strong improvements supported by our strategic actions We have a solid financial position We are committed to our financial targets and have a robust plan to get there
Slide 50: Q&A
Q&A JUAN VARGUES & STEFAN FRISTEDT
Slide 51: Summary and Closing Remarks
SUMMARY AND CLOSING REMARKS JUAN VARGUES
Slide 52: Summary and Closing Remarks
SUMMARY AND CLOSING REMARKS ▪ We are showing strong progress in driving our strategy and improving our financial results ▪ Outdoor – Vehicle Based Activities, a new category of stand- alone end-user solutions puts Dometic in a unique market position ▪ We intend to accelerate the repositioning of the
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