Dometic Group AB (publ) (DOM) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Dometic Capital Markets Update for 2021. My name is Rikard Tunedal, I'm the Head of Investor Relations for Dometic. And before starting, I would just like to go through a few practicalities. First, we are doing a video recording of this event, and for those of you who don't want to be part of that, we have some seats available there where you can sit just listening. So if anyone wants to move, we can do that now. Good. Secondly, the presentations from today are already now available at dometic.com. You have WiFi details on your name tag. It's capital S as in sun and then it's lower case after that. Then thirdly, we will have a coffee break in -- at around 3:45, and during that break, you can visit our products booth here, the camping corner or the Eagle corner or even outside where we have 3 vehicles equipped with the vehicle-based products that we are providing. So with that, I would like to go to the agenda. The agenda today is around strategy execution, and it's a special focus on outdoor. And first out, Juan Vargues, our CEO, will talk about overall strategy execution, and then he will be followed and joined by Eva Karlsson, Head of Operations, who will talk about sustainability and how that's integrated. Then if we look at our strategy, we have 3 blocks. First one, a profitable expansion in mobile living. We have product leadership through innovation, and we have continuous cost reduction. And before break, we will talk about profitable expansion in mobile living. Juan will start off, and then we will have Peter Kjellberg and Henrik Fagrenius talking about outdoor, more specifically around our offering and our position on that. Then we will have the break, and after the break, we will continue with product leadership through innovation with our CTO, Anton Lundqvist. Eva will be back on stage talking about continuous cost reductions, and then our CFO, Stefan Fristedt, will sum things up in the financial update. Then we move over to a Q&A with Juan and Stefan before ending at around 5:30 p.m. Good. That's the agenda. I hope you will enjoy. So let's start. [Presentation]

Good afternoon, and great to see so many of you visiting us and spending a couple of hours with us discussing Dometic and our way to the future. So it is about 2.5 years ago that we had our Capital Market Day where we introduced a new growth strategy. And by now, we feel that this is the time, on one side, to look back and reflect about what we did in the last couple of years but also to decide whether some of the events that took place in the last couple of years did have any major influence on our strategy, on our future direction. And it has been indeed eventful. We are in a very dynamic market. It started with a major inventory correction at the end of 2018, 2019 in 2 of the most important markets for us, RV industry, Marine industry. Then we got the tariffs. After the tariffs, we got COVID kicking in, in February, March last year. After a couple of months, expectation became a reality. The market bounced back big time. At the same time, as the sustainability trend started to accelerate, electrification is growing worldwide. With that, we also got into supply chain shortages, electronics, but also many other components worldwide, most industries, and then last but not least, supply and demand led to a situation where both raw material prices and freight costs have been increasing big time. So our strategy, 3 main blocks: profitable expansion into new areas, product leadership and cost reductions. Then we have the people dimension. We are coming from a history of many acquisitions and fragmentation. We are putting a company together. We are developing one global business. We are building together with all our colleagues around the world. And then last but not least, sustainability is crucial. It's becoming a reality. And as a market leader in our industries, we want to be the leading force. We want to be the driver for sustainability in our industries. Change. Two years ago, we mentioned that we wanted to grow, and we wanted to reduce exposure to the cyclical OEM business. A couple of years after, what you can see is that we have grown indeed. Sorry, I went too fast there. So looking at what we achieved in the last couple of years, these are just a few indicators. We are going to go much more in depth during the few hours that we will spend together, but in reality, the company today is about 50% larger than the company we had 4 years ago. We increased profitability from 13% to 14.5% in spite of FX -- negative FX in the last couple of years, in spite of the tariffs, in spite of what we are seeing just now with raw material prices and freight cost. From a product leadership perspective, major progress. We moved from Innovation Index of 12% to Innovation Index of 26%, meaning Innovation Index, the share of revenue coming from products that we launched in the last couple of years. If we look at the number of product launches in the last 3 years, in the period '19 to '21 compared with the period '16 to '19, we have launched 82% more products, covering both the old vertical markets as well as the new vertical markets. From a cost-reduction perspective, it has been a lot about reducing complexity, the complexity that we gather after many, many years of acquisitions. We are today running with 59% fewer SKUs, reducing our complexity. We have reduced our number of suppliers by 27%, and at the same time, we have reduced our sites with 22%, and [ all of a sudden ], if we go back and look at our restructuring program that we introduced in October 2019, we are just now running annual savings of SEK 150 million to be compared with the SEK 400 million that we have as a target. And then back to sustainability. We reduced CO2 emissions by 70% in the last 12 months. We are reducing the lost time injury frequency rate quite heftily as well from 4 to 2.4, and at the same time, we are also increasing the number of audits that we are doing all around the world. Going back to growth. We are growing in all the sales channels, meaning OEM, Service & Aftermarket as well as Distribution. But as you can see, we are growing faster outside the OEM business. And as you can see as well, in the last 4 years, on a pro forma basis, we have almost doubled the size of the company. If you look at the portion of our sales coming from the non-OEM, we have moved the company from 39% into 57%, and we're looking -- when zooming a little bit more deeper and looking at the OEM, the RV OEM business represents today 27% of our sales on a pro forma basis and stands for less than 10% of our EBIT. So a major transformation of the company into less cyclicality and higher margins. Let's have a deeper look at the first block, profitable expansion. Two years ago, we were mentioning to you that we had 3 new vertical markets that we wanted to get closer to. One was the broader outdoor; second, residential outdoor; and thirdly, mobile deliveries. Two years ago, we were showing some concepts, some renderings. Today, these products have been launched. And today, we are going to pay special attention to the outdoor business, but even on the other 2 businesses, the other 2 businesses, we have done a lot of progress. Looking at the fast-growing residential outdoor. We believe that we have a good opportunity to develop a good business for us. We have, as a target, to be running at SEK 1 billion in the coming 5 years coming from that business. The same is valid in terms of mobile deliveries where we see a good potential to be part of the food delivery market, which is also growing dramatically all over the world. Digitalization, e-commerce. We are becoming more consumer-orientated. We want to develop relationships with our consumers. We want to follow an entire consumer journey, and of course, that transaction -- in doing transactions, D2C is one of the critical points there. We have been building up the competence in organization. We implemented a new software platform back in January this year in the U.S. We went live in Australia on the 15th of June. We went live in Scandinavia 2 weeks ago, and we will roll out to the rest of Europe and Marine in the coming 2 quarters. We have a clear target. E-commerce D2C should be 20% of our revenues for Service & Aftermarket and Distribution. Of course, the OEM business is a different story. There, we are also digitalizing. So we want to move EDI. We want to increase the portion of EDI that we have in the same way as we want also to grow the B2B e-commerce. On top of the internal competence that we are building up organically, bringing in people with e-commerce experience, we're also getting know-how through acquisitions. Henrik will comment later on Front Runner, South African company, showing already today 52% of the business revenues are D2C e-commerce. The same is with Igloo. Igloo has been moving rapidly in the last 18 months and represents today about 10% of the business. If we leave profitable expansion and move into the second block, product leadership, as I mentioned, major progress. We are running after Q3 at 26% Innovation Index, and in reality, we are revamping all our products in the traditional areas while we are moving into new areas. So you have seen a number of product launches in the outdoor territory, we have seen also residential outdoor kicking in and we have seen mobile deliveries. So it's both innovating in all vertical areas as well as introducing new products, innovative products in the new areas. Then profit expansion normally costs money, right? Product leadership normally costs money. The number -- the third block is really about helping us to finance our growth at the same time as we are building a high-performance organization. And the same, I have to say that we have taken a major leap in the industrialization process in the last couple of years. I mentioned SKUs, 59%; suppliers 27%; sites, 22%; SEK 150 million in savings on an annual basis after Q3. And of course, we have a long way to go still in comparison to where we want to be, but still, I do believe that we have taken a major leap in industrialization of the company. Then last but not least, sustainability. Sustainability is becoming an integrated area of our business. It's becoming part of our DNA. Mobile living is about spending time in nature, and we are, from that perspective, an enabler, a facilitator through our products. As a market leader, we have a great responsibility to be the leading force in that area and to drive sustainability in our industries. So we take it very seriously, and we will share with you more. And in order to do that, I would like to introduce Eva Karlsson, Head of Operations, to bring us more in depth. Eva, thank you very much. [Presentation]

So hello, everybody. I'd like to start with repeating a little bit what Juan said before is that driving sustainability in our industry is the foundation in our strategy. And the reason is simple, our consumers and, hopefully, all of us love to be out in the outdoor. Sorry. And we like to see the nature to be the resource for everyone to enjoy and explore now but also in the future. In the last 3 years, we have focused our efforts into a concept we call on the move. This meant that we were integrating ESG into all parts of our business. But we feel ready now to take the next step, and we like to transition into a phase we call innovative leadership. And I'm going to show you a little bit of a new structure, a new platform for that sustainability work, and it's also including a new way of communicating around sustainability. We see that we have been focused and we are shifting from being focused internally -- sorry. Here. Internally and also more process-oriented, and we like to shift from that to a much bigger picture and also what actually the purpose of the company is. And in short, it means that we are shifting from focusing on vehicle to now move to vehicle-enabled outdoor experience. We also move from focusing on offering sustainable products to enable a sustainable lifestyle. And at last, we are moving from reducing CO2 emission in operations, very much process-oriented in operation, where most of the CO2 emission is out when usage of the product, which means that we now focus more on reducing the CO2 emission of our users. So we like to see that Dometic contributes to a more sustainable world by enabling people to enjoy and explore nature locally and much more frequently. We do so by offering innovative, durable and low-carbon products, inspiring an active and comfortable but also responsible life out in the outdoor. This is the platform I talked about before that we will work around where we have 3 focus areas: people, planet and governance. It also has an area of influence, which is the company, product and supply and consumers. I'm not having the time today to spend and explain all the things we are going to do within the gray boxes, but I'm going to give you some examples of new selected priorities. The 2 first ones on the left side here is where we like to increase the -- not cyclicality. The -- I've always missed the word. Nevertheless, I'm going -- those 2 examples is very much about we are -- one is extending the product lifetime where we are -- in every new product that we are launching, we will make sure that we have a service program for extending the life of the product. For example, Anton will talk later about upgrade kits. Secondly, another example is that we will select a couple of pilot projects where we would start to use an increased use of recyclable and renewable plastic material. And third example is that we are committed to assess all our new direct material suppliers for ESG. And what already mentioned earlier is that we have set a long-term target that we are aiming to reduce CO2 to half till 2030. Back to the platform. We're also seeing -- as I mentioned before, we like to communicate a little bit more from a bigger picture about sustainability. And the 3 main messages you see here marked in green, sustainable lifestyle, well-being and sustainable innovation, and I'm going to explain those a little bit more for you. By enabling -- so a sustainable lifestyle. By enabling staycation and exploring local getaways, we empower local and, therefore, a more sustainable leisure activities. Well-being. By making our products making the outdoor more comfortable and more accessible, we mean that we inspire people to be more active and, therefore, contribute to a more well-being among all of us. And at last, the sustainable innovation. With innovative low-carbon outdoor products, we lower the impact on the climate as well as extraction of virgin natural resources. So taking the opportunity to have you here, I would like to end by saying I like to promote that outdoor is everywhere for all of us to enjoy and explore, and hopefully, you do that with our products. Thank you. So Juan, I welcome you.

Thank you. So let's summarize the first block. So execution. We are back to execution. We have a solid strategy that we are executing and that is already delivering very good performance for the company. Secondly, we are changing rapidly our mix to more -- to less cyclicality, higher margins, less exposure to the OEM business. And thirdly, we are enabling people to enjoy nature by having innovative, durable and low-carbon products. So let's get a little bit deeper into profitable expansion. These are the trends that we investigated 2.5 years ago, 2018, 2019. We were looking for further development to existing strategy at the time. What is going on in the marketplace? What kind of trends? What kind of growth trends are going to have an influence on Dometic? How Dometic finds a future place? And of course, the combination, on one side, we were looking for trends. On the other side, we were looking for the core competencies. What is Dometic about? What are we really good at? And already, at the time, we introduced that we were, for many, many years, working on a number of technologies. We were good at cooling. We were good at heating. We were good at electronics. We were good at mobility, and we were good at space utilization. So the question is how do we find our way. Let's have a look on the trends one by one. Increased leisure spending, crystal clear. If we look at the U.S. market, and you will find exactly the same statistics if you look at Europe, the leisure industry has been impacted by COVID during last year, but even if you exclude 2020, the leisure industry has been growing organically 6% year-on-year during the last 7, 8, 9 years. So we are acting in a growth industry. Another factor, another variable that is very, very interesting is that 80% of campers are traveling less than 200 miles. Almost 30% are traveling less than 50 miles. So shorter distances but more frequent, which we believe is something that benefits Dometic. Second trend, the world is becoming more mobile. We are all aware of how the market for food deliveries is growing. It's booming everywhere. Still, the market, I would say, is in its infancy. It's about 20% of the world population are consumers today. So still a lot of potential opportunities to grow, and that's where our mobile deliveries are coming in. We want to be part of that journey. Market consolidation. This is going on in many different industries. 2021 is going to be one of the top 3 years in terms of market consolidation globally. Well, Dometic is present in a number of very fragmented industries, and we believe that we have a good opportunity to become the -- one of the market consolidators in our industries. Sustainability. More and more investments are becoming sustainable, and what is also very important is that people like you, people like me, we are ready to pay more for sustainable products. We are a quality company. We are a premium brand, and we want also to benefit from that movement. Innovation, very, very clear as well. We see a lot of electrification, how electrification is kicking in rapidly all over the world with expectations of electric cars being 30% of the number of newly produced cars in 2030. How do we become part of that? Well, that's where our solar panels, where our energy storage solutions are coming in. We believe that in the future, on one side, people aspire to spend more time in nature but without giving away comfort, without giving away convenience. That's where the products that we are launching today, that's where a number of acquisitions that we have made this year are playing a very important role. Connectivity. I would say that if you look at our investments today, connectivity is the area where we are spending most money simply because we see these trends. We see that more and more devices are connected, and we want to be part of that as well. Digitalization, e-commerce, we already mentioned, already representing more than 20% of all retail sales globally and about 1/4 of the world's population already shopping online. Of course, we need to be part of that. And this is also a trend that will benefit our new products, our new approach to the market, becoming more consumer-orientated. So altogether, we have a number of global trends that are not unique for Dometic by any means but Dometic can benefit big time, and we can benefit both in the all-vertical markets as well as it is driving really Dometic into a new -- these new vertical markets. I already mentioned previously our core competencies. We are working in 4 application areas that we are reporting. We are talking about Food & Beverage. We are talking about Climate. We are talking about Power & Control and others. And in reality, a lot of people sometimes talk about, "Yes, but Dometic, you are doing so many changes. It's difficult to grasp." In reality, what we are doing is taking the core competencies we had during many, many years that we built up during many, many years and moving from the inside of the vehicle to the outside of the vehicle. That's, in reality, the journey. What that brings is, obviously, the opportunity to penetrate new vertical markets with a lot of consumers. So coming back to 2019. 2019, we were repositioning the company from a potential market of SEK 60 billion altogether into SEK 200 billion. Already then, we were talking about Food & Beverage. Food & Beverage is really the application area where we have the most opportunities because the market is simply giant. Just look at the cooling market business, look at the barbecue business, huge global markets. The same is valid with power and energy, which is growing very, very fast. So from a product perspective, from an application area perspective, we believe very much in Food & Beverage. We believe very much in Power & Control. From a vertical and market perspective, you know already how strong positions we have in the RV industry or in the Marine industry. At the same time, our estimation is that the outdoor -- this broader outdoor is about 50% with the potential we have to grow. And that explains, obviously, why we're investing both organically and acquisitively to penetrate the outdoor business. Let's have a deeper look at the RV OEM industry. Well, it is clear when looking at the picture, this is a cyclical industry. It grows very nicely, 8%, 10%, 12% year-on-year, but if you look at the development since 2007, you get into a compound average growth rate of 2%. If you look at the last 35 years, you will find the same, between 2% or 3% year-on-year. But we also see a number of very interesting trends in what we call today for the RV industry. On one side, sustainability is already having an impact. We see how the big RVs are becoming fewer and fewer and how the, what we call, panel van, small panel van market is growing much, much faster. We -- so we see and we believe electrification will have a major impact in the industry. We believe that mobile power solutions are going to be key, coming back to the combination: convenience, comfort but also spending more time out in nature. Today, it's pretty difficult to get your teenagers to follow you during the weekend if they don't have access to music, if they don't have access to mobile phones, if they don't have access to the computers. So how do you do it when you are going to use your battery to drive the car? That's where, again, solar power solutions and energy storage kicks in. We see that the RVs are becoming smaller. And when they are becoming smaller, you have less space. So we believe in our future where you are going to have more of the devices that are today installed. They will be a stand-alone, which we believe is also positive for Dometic because all of a sudden, it's not just about supplying to new equipment but also supplying the entire installed base of vehicles. And the paradox is that while RVs are becoming smaller, cars are becoming bigger. I guess that most of us in this place believed, 15 years ago, that cars were going to become smaller, but you see the reality. The SUVs, together with electrification, are the 2 new trends that you have today in automotive and is expected to become 60% of the total automotive market in a few years from now. So we perceive a market which is becoming a crossover market where, depending on where you are in your life, you will have a panel van or you will use your SUV or you will leave your station wagon. Hopefully, you get a better feeling during the break when you have the opportunity to go out and see how our products fit into those different solutions. So once again, we are moving from the left-hand side, the RV industry to Marine installed products where we have very strong positions into new markets, driven by panel vans and smaller RVs with more less installed products, more flexible solutions, and then moving into a new area where it's not any longer about dependence on the number of produced units but much more about the size of the car park that you, as consumers, you as a car owner become a potential target for Dometic. So we're expanding our markets from an RV market, which is producing about 800,000 vehicles per year, into a combined SUV, pickup truck, station vehicles, a market which is producing 35 million units per year. From a car park or registered park of RVs, which is 15 million globally, into 300 million users of families that we can help with. So -- and this is what we call outdoor vehicle-based activities. So Dometic is not about clothing. Dometic is not about apparel. Dometic is about doing what we have been doing outside -- sorry, inside, outside, moving outside the vehicle on how to use our devices. So what we are talking about is mobile cooling. What we are talking about this mobile cooking, mobile power solutions and mobile storage and rest. And just to get a feeling on how this is going to help Dometic to become less cyclical. While we are perceived, obviously, as part of the RV industry, it is clear that revenues on the OEM side are totally dependent on the number of new vehicles produced and delivered every year. So the economy is getting tougher. Obviously, the business gets into a tougher situation. You see the average price -- list prices for some of these products that we are launching or that we have launched, anything from $30, $40 into $2,000. So this means that the vast majority of people still afford buying Dometic products even if you are not buying a new vehicle, and that's the purpose. The purpose is to become more consumer-orientated, to create more pool, develop relationships with consumers leading into repeated purchases. We want to sell a passive cooler today to you, and we would like to have -- we would like you to have an active cooler in 2 years from now and a new group of tent in 5 years from now or a barbecue in 6 years from now. So it's really about getting that repetitiveness in the business. So I guess that a picture is worth a thousand words. So the concept is easy. It uses a standard car for a weekend adventure. Or in other words, it's about -- from a business perspective, it's about reducing cyclicality and moving from being perceived as high-ticket discretionary spend to low-ticket discretionary spend, more B2C, lower cyclicality and higher margins. So that's what we are doing from an organic perspective. So what about acquisitions? And how do acquisitions play in? Well, Dometic has always been acquisitive. It has seen a lot of complementary acquisitions. But of course, today, we have a strategic agenda, and we are talking about penetrating new product areas like mobile power solutions. We are talking about entering new vertical markets, and then all of a sudden, acquisition become a very, very strategic and critical part of our agenda. So you look at 2021, obviously, we didn't start the process 2021. We started the process at the beginning of 2019 when we put together an M&A team in different parts of the world and started to build up a pipeline, and these are really the results of a couple of years having COVID in the wind. As you can see, non-OEM business whatsoever. What you can see is that we are looking for service and aftermarket organizations. We are looking for the new vertical markets like residential outdoor. We are looking for mobile power solutions or we are looking for outdoor companies. Igloo is a different animal. Igloo is outdoor, but of course, it's a transformational acquisition. While all the others are bolt-on, Igloo gives us a platform. You can see as well how we are thinking on the integration and the branding. We don't want to have a whole bunch of local brands. We believe in global brands. We are driving a global company, and we don't see the value when showing a company own 27 different brands because you will never get the brand recognition, especially when you are communicating to consumers. So already now, after a couple of months after acquisitions, we are migrating the old brands to double-branding. And you can see all companies but Igloo are going to become Dometic. There is no date for dropping the old brands, but we are starting our journey, which is extremely important. Again, when you see that these products, the products that these companies are selling, they are seeing they have a very clear brand, and we want every single product on the market to sell for us. Igloo, again, is a different story. On Igloo, we see a new platform where we can integrate smaller brands in the good and better space into Igloo while Dometic becomes premium brand. So we have a clear strategy. And in this slide, a lot of text, but what I would like you to remember is, again, that you have bolt-on and you have transformational. Transformational in our businesses, there are not many. I get this question very often. "Yes, but can you this? Or can you that?" Well, there are not many companies turning 300 million to 400 million euros or dollars, but there are hundreds of companies turning 15 million, 20 million, 30 million dollars or euros, and those are extremely interesting and bringing a lot of value if you are good at integrating companies. We have a strong pipeline that we have been building up in the last couple of years. We have a very clear structure. So we have global coordination. We have the segments, the different segments in charge. We're mapping out the market, starting acquisition process and integrating the companies, and then we have global responsibility in terms of the transformation of acquisitions, acquisitions that will be the platform for something new. We have -- like when you are selling, you have a conversion rate, and we have a pretty high conversion rate nowadays. So we believe that we are prepared for the future as well. How do we integrate? This is another question that I get very, very often. "Yes, but you have 9. How do you do it?" Well, it's not secret. I mean it's very, very seldom that you are buying 4 companies exactly in the same country doing exactly the same. So we have different teams doing different things. There are a number of, I would say, non-negotiables. One is management attention. Every single acquisition deserves senior management attention, and I'm talking about management in the segments -- senior management in the segments or global management when we are talking about transformational acquisitions. Secondly, we believe in keeping entrepreneurship in the companies, and therefore, we always strive to have an earn-out. There are different schools, but in our school, it is important to have the management in place to start the process of integrating, to help us with the branding, to help us with the synergies instead for us just jumping in the day after and starting to change things. That's the best way of losing your margins -- losing your managers. Double-branding is extremely important, both externally for the market, for the consumers to build out the Dometic brand in those areas, but also internally. A lot of people say, "Yes, but acquisitions, business as usual." There is nothing as usual the day after the acquisition. I can guarantee you that. People start thinking, and I can tell you because I was part of an acquisition myself. The company I was working for was acquired by ASSA ABLOY many years ago. So I know how the process works from their perspective. And then, of course, you start always with the backbone synergies, and then you take the commercial synergies on the front. So we have a very, very clear process to integrate the companies that we have acquired. So a couple of words about Igloo. I mean, first of all, Igloo is an iconic brand. There is no American not being familiar with Igloo. The company has been in transformation for a couple of years, has been PE-owned for many, many years. They got a new management in place 3 years ago, and they got the management having dreams. You can see the growth in market share value-wise in the last couple of years. That market share is a combination of 2 things. It's obviously getting much more product innovation, but it is also moving to higher-value products. So average prices are moving upwards, which is very positive. And the other one is, again, that Igloo is present in the major market in the world, a market that has been growing 7% on a compound basis in the last years. This is what they are doing for living. So they are -- together with Dometic today, they are already today the global market leader in passive coolers and together with Dometic, we are the global leader all over the place. So that's the 70% of the market or the revenues, then about 20% is drinkware, which is also highly profitable business, once again, low ticket; and then soda box, which is also -- cooling soda box, I would say. So everything has to do with cooling. And Igloo, as I mentioned, is really on their own migration from just being good to become better, and that explains the average sales prices that they are getting and the margins that are improving. The way we position Igloo is very, very logical. Dometic is a premium brand, and as a premium brand, in our opinion, you cannot go too deep south. At the same time, Igloo is perfectly complementary. So we believe that we are going to have a small area where we will be, both of us, but the different areas are very well defined between the premium and the better and good. Igloo, as I mentioned previously, had got a new management team 3 years ago. They have their own plans to improve the performance of the company. Part -- critical parts of those plans are obviously product development, more innovation, e-commerce, moving into -- or being more aggressive on the prices that they have been at the same time as they keep working on the cost reductions. Then from a Dometic perspective, we see a number of areas that are extremely interesting. Dometic has been growing very, very high 2 digits in the U.S. in active mobile coolers with very, very, very high margins, but the market is passive. So for Dometic to be alone in the market driving active cooling would take many, many years to reach $0.5 billion in revenue. We have the technology. Igloo has the relationships with all the retailers, with all the sporting goods retailers. So the question is how can Igloo penetrate or migrate the passive market into active market with the support of Dometic's technology. That's one part. The other part is that they have all the relationships, and of course, we have been building up relationships, but we see a very good opportunity for Igloo to support us and accelerate our own process or penetrate in the American market, and that's a huge market. Thirdly, Igloo has 92% of the revenues in the U.S. And what's funny, the paradox, I guess, is that despite the fact that only 8% of the revenues are outside the U.S., still they have a brand. They have a brand in Europe. They have a brand in APAC. And I guess that the reason for that is that for those of you who've been familiar with Brunswick, Igloo used to be part of Brunswick 30 years ago. So I guess that they brought the coolers to the marine applications many, many years ago. So if you enter a marine wholesaler or dealer in Europe or in APAC, they will be familiar with Igloo. On the contrary, they have 1 person outside Americas. So it's not easy to build up, say, a business outside. We have these organizations in every single market in West. So the question is how can we support Igloo's development outside the U.S. And then, of course, we have the cost synergies. We have sourcing. We are sourcing a number of components. We will see some savings in that area as well. So altogether, we are expecting savings of about $50 million in the coming 5 years. And with that, I would like to introduce you to Dave Allen, President of Igloo. Could you please show the video?

Hi. My name is Dave Allen. I'm the CEO of Igloo Coolers. I've been in consumer products my entire career. So the first 18 years in my career, I spent with Unilever operating both in the U.S. and then throughout Europe, and then the last 10 years I've been in the sporting goods industry. So I was the President of the Coleman business in the U.S., and then I was the Group President of Vista Outdoor, where we oversaw 35 brands in the outdoor space, and then the last 3 years, I've been the President and CEO of Igloo Coolers. So what gets me really excited about the Igloo acquisition? I think it's really 2 things. So first, if you think about Igloo, 92% of our sales come from the U.S. and only 8% of our sales come from outside of the U.S. So when we look at Dometic, it's a huge opportunity for us to be able to go and leverage their global scale to be able to go expand the Igloo brand into Europe, into Asia and into Australia. The second thing that I get really excited about is the fact that we can help accelerate the commercialization of the Dometic brand in the North American market. We have a ton of experience with consumer products, and we know our retailers very well. They're very excited to be able to go and get the Dometic brand in the U.S. and then really build on this concept of vehicle-based activity. So those are the 2 things. We've gotten into the integration in the last couple of weeks, and I would tell you there are a ton of opportunities. Probably our biggest challenge is going to be really prioritizing all the opportunities that lie ahead of us. So as we think about the profitability of the Igloo brand, we're doing a number of different things. Now with our strategic plan, there's 2 areas of specific focus that will go drive gross margin improvement. So the first is we have a set of 5 strategic growth initiatives, and they're all large-scale opportunities, all at accretive margins. So for us, that's segmentation, playmate, direct-to-consumer, soft sides and sustainability. So through those 5 initiatives, we'll go and not only accelerate our growth but also do that at accretive margins. The second, probably the most important is through a set of initiatives that we call fuel for growth or continuous improvement. Over the last 3 years, we've saved 2% to 3% per year on average through these initiatives. So it's a combination of manufacturing and distribution, value engineering and then procurement and sourcing. So overall, I'm highly confident in our ability to continue to expand the margins of this business.

So going back to acquisitions. We have completed 11 acquisitions since the end of 2017. As you can see, Igloo is coming to Dometic with lower margins than the rest. At the same time, all the other acquisitions that we have done have been accretive to our average margin. So from that perspective, putting all together, all the acquisitions together are very, very little dilutive to our common margins, which is something very, very good. Let's take one sample of one acquisition that you are also familiar with, SeaStar. We acquired SeaStar in December 2017. Despite the slowdown in the industry in 2018, 2019, the company has grown 27% during the last 4 years, while profit has been growing 69% during the same period of time, exceeding our expectations from the beginning in terms of synergies. So I think this is a good sample that we know how to integrate these kind of companies. Then moving over to portfolio strategy. Everything is not about acquiring. With every acquisition, you are getting complexity. And for us, margin improvements is always the difference between the new complexity that you're bringing in and the complexity that we're getting rid of, and you can do it in many different ways. One way is what we are doing with SKUs, what we are doing in number of sites, number of factories, but then the other one is evaluating, does everything fit to the strategy? What was right 20 years ago might not be right today any longer. So that's part of the process as well, to evaluate what do we want to have more of and what do we want to have less off. In terms of what we want to have more of, it is clear. Distribution, we want to have more Service & Aftermarket business. We want to build global platforms. I have no use for a market leader or one product in one continent if we are not existing in the other 2 continents. The only reason for being global is that you have synergies. Otherwise, we should split the company into different regions and set them off. So that's one. We want to have access to consumers. We want to have that connection during the consumer journey. So those kind of companies are very, very interesting. And then, of course, we are interested in acting in grow industries and acting in higher-profitability industries. That's another important parameter for us. So being very, very clear, if you look on the right-hand side, we want to have more Service & Aftermarket. We want to have more mobile power solutions. We want to have more of outdoor equipment and distribution. At the same time, as we are questioning a number of businesses whether they fit into the future or not, and those could be, again, simply strategically are not fitting anymore in the way we are moving but also that they are low-margins, that they are low-margins on the transactional side, but they are not leading to a huge Service & Aftermarket where we can recover part of the margins. So that's also a very, very important part of our future. So just summarizing. We see that the market trends that we found out 2 years ago, if anything, are accelerating, are having more impact on Dometic from a positive perspective. We see that the -- we feel that there is a crossover market that is going to lead Dometic into higher ties, much closer to their consumers, creating pull instead of push, leading to stand-alone products, repetitive purchases and higher margins; and then that acquisitions and divestments are a very, very important part of our agenda, and we will continue to work in that direction. And thank you very much.

Thank you very much, Juan. Very interesting. Now we are moving on in the local profitable expansion in mobile living. Juan talked about outdoor and our offering in vehicle-based activities. Now Peter Kjellberg, our CMO; and Henrik Fagrenius, our President of EMEA, will give you more details on our position and on our opportunities. Please, Peter. [Presentation]

Hello, everyone. My name is Peter. I'm the CMO of the company, and I will talk about Dometic outdoor. First of all, I want to put it into a context when we talk about outdoor, and what you see in front of you is our brand portfolio. So our group is the Dometic, and then we have a number of sub-brands where Dometic Outdoor is one. It's the biggest one. It's the most important one, but we also have other ones. We have a sub-brand called Dometic Home, and Dometic Home contains all our products that, for instance, our wine sellers, our mobile bars, our market-leading outdoor kitchens and so on. And as a side note, when we have our break after mine and Henrik's speech, please go out, and you will see the Dometic MoBar. Behind the Dometic MoBar, you will meet [ Richard Mann ], who is probably the best mock maker or alcoholic-free drink maker in Sweden. Behind the Dometic MoBar, you will meet Richard Man. He's probably the best mock maker or alcoholic-free drink maker in Sweden. So he's also a chemist. So if you want to talk about how you create the optimal non-alcoholic drink, he is the guy for you. We also have a sub-brand called Dometic Professional, and there is where we collect all our business-to-business businesses. Typically then, our hospitality services or our new exciting business in mobile delivery that Juan mentioned before. Across, as you see below, you see Dometic services. And Dometic Services supports the product offering in the other 3 sub brands with support and service. So our main ambition is to continue to develop and strengthen Dometic as our global core brand. But for good reasons, as also Juan mentioned, we want to develop other brands that could be not fit for the Dometic branding. Igloo is a perfect case. It's a perfect complement to the Dometic brand. You see Igloo products here on your right side. And then typically, then we have that good, better positioning of the products. And if you move over here, you see the same category, but then with a better and best product features. So a very good mix makes us very strong in that category. And then we have a lot of brands that we have acquired, that we have in transformation. And we normally do that when we acquire a company from day 1. We put them on a transformation journey. So somewhere in the future, they will be integrated into the Dometic brand. So this is how we work when it comes to our brand portfolio. What is then Dometic Outdoor? Before I talk about that or answer that question, I have a personal wish to you, and this is something that is very annoying for myself. And you have an appetite when you have a legacy, you -- it's always very difficult to come away from that appetite. We were -- before we were a refrigerator maker or we were a sub-supplier to the RV industry, that was before. Today, we are a true outdoor company. And I think we have come to a tipping point. It takes time. You have to repeat and repeat and repeat, and you comes to a tipping point when you suddenly then get appetite of a leisure company or an outdoor company. I think we have reached that point. Sometimes still, we get mentioned as the sub-supplier or the refrigerator maker, and then I have to take my blood pressure pill. So if you have -- if you could help us to now really reinforce the position that we have in the market. We are a true outdoor company. We have -- we are an outdoor company with a unique position in the market. We are an outdoor company with a unique position in fast-growing market. So what is then Dometic Outdoor? When we talk about outdoor, we talk about vehicle-based outdoor. And we are the leading vehicle-based outdoor brand in the world. For us, it's regardless, a sunset is a sunset. If you are in an RV, a boat, a van, SUV or passenger car, it's still the same outdoor experience. And we create and develop offerings to everyone regardless any of the vehicle type. And I think I'm super proud actually of this icon you get down here. Christmas came out early this year. It's a reward that we got for being the fastest-growing equipment brand in the U.S. outdoor industry last year. So very proud of that one. So what is then our offering to the market? Well, I've been working with brands all my life. I've been working -- have the pleasure to work with very strong brands, some of the strongest in the world. Sometimes, it's very difficult when you have brands to explain what actually are you doing. And sometimes you need a manual to explain the brand manual. We have done the reverse. We have kept it very, very simple. So the idea with us is that we provide great solutions for people who enjoy outdoor vehicle -- activities enabled by a vehicle. That's it, super simple. And it's mainly in 4 areas. It's mobile cooling, as you can see here, mobile cooking, mobile power and mobile storage and rest. And you will hear more about this later. The same, our promise to the market is super simple, easy to understand. We will make the outdoor accessible and enjoyable for all. That's the whole idea. And with that comes also a promise or you can say a purpose that we live after. We want really to make mobile living easy for everyone. And this is not just words because we really live after this. If you're a product manager, if you're a product designer, if you work with marketing, doing communication, the only thing you think is how can I make mobile living easier. That's the mantra you have behind you. And I could bet you a lot of money if you wake a Dometic employee in the middle of the night and they say, what is your purpose working for Dometic? This is the answer you will get. It is really rooted into our DNA. And I think that is actually one of these parts of the recipe why we are very successful in the outdoor industry. What is then vehicle-based outdoor compared to traditional outdoor? There's a lot of differences, actually. So if you look at the right side, if you look at traditional outdoor, it's a lot about performance. Materials are super important, lightweight and so on. It's about going out there. So typically, when you portrait something like this is at the broad horizon, it's mountains, it's peaks. And quite often, it's actually single people. It's not in a social context. Moving over to vehicle-based outdoor, it's the complete the opposite. It's about comfort, to take part of your comfort from home and to the outside and you do it in a social context. So it's about having family with you. It's about having friends with you, and you always do it in the proximity of your vehicle. So a big difference of how you position yourself and how you experience the outdoor. On the left side, you have quite a few strong global brands. On the right side, you know yourself is a lot of brands who compete for the same piece of the pie. Another thing that is a quite big difference from the different outdoor types is that on the right side, traditional outdoor seasonality becomes very important. So trends in terms of colors, materials and so on. That also means that when the season is over, then there are new colors, new materials that becomes the next thing. So then you need to discount your offering. If you go in and look at what we are offering is longer life cycles. It's longer shelf life, meaning less discounting. So Dometic Outdoor, we are actually SEK 23 billion in revenue in Outdoor. It's quite impressive. And we are often compared to other also very good, strong companies in the vehicle-based outdoor industry. But if you compare our turnover towards the other ones, we are considerably bigger. And I also think this is quite interesting when you talk about reality and perception. If you look at other perceived strong domestic Swedish outdoor brands, they are considerably smaller than we are in the outdoor industry. We are probably the biggest Swedish outdoor brand. Vehicle-based outdoor , that is not something that is new for us. We have been doing this all the time. We became our own company in 2001. And then our focus was RV. And I think it's very good that it was RV. We have become experts in creating solutions for very compact environments under very demanding circumstances. We took the decision in 2017 to move into the marine business with that great acquisition will SeaStar Solutions. In 2020, we started to feel we have, of course, good business intelligence. We saw the easiest one. The registrations was increasing when it comes to vans. But things like real-time indicators like hashtags, for instance, Van Life in a very short timeframe increased to 300%. So I think we were very agile and quick, came up with good solutions for the van market. And this year, we have moved into SUV and passenger market, which, of course, is very, very interesting. Because what is happening is that you look at the threshold when it comes to investments, considerably lower when it comes to SUVs and passenger cars and the amount of vehicles is increasing dramatically. But I think it's worth to point out that we have growth in all our categories. Personally, I'm super excited about this one. It's the growth of SUVs. There are today around 35 million SUVs registered globally. On a side note, I don't know what has happened. I worked for Chrysler Corporation many years ago. If you remember in the 2000s, if you had an SUV, you couldn't drive it in the streets. If you were parking your SUV in a major city in Europe, it got smashed. So at that time, it was really, I think, a question, would the SUV as a category survive going forward? And now it's the dominant vehicle type. So every second vehicle in the U.S. is SUV. And we're not that far behind in Europe, either. The market share is 40%. So very strange and impressive change. And I really love it because the SUV is a super interesting vehicle in itself. It has a nature of that you use it in your every day, but then you just can go out there. Spontaneously, you can do your weekend into an outdoor adventure. And with our new product concept, I think we have the perfect mix of the perfect vehicle and the perfect product concept. Some of those products, we will be able to see on the outside on the parking lot here. What also has happened is that we have then been exposed to a new behavior in the market, which is really interesting. So we have always been good in those going long distance and staying long time. But what is happening now that is a huge increase in daily activities. People want to do one-day trips going out, surfing, mountain biking, bird watching or just whatever you want to do in a social context, still want to take some of the comforts from home with them. And staycation, that is increasing everywhere. So trips going from 1 to 3 days. So typically, you go Friday and back home Sunday with the proximity of your home to just experience the nature around you. And now we have the complete offerings for all those different stages. So we are expanding into new vehicle types. We are expanding into new types of behavior when it comes to trips. We are also expanding into new consumer groups. And the way we are working with consumer groups is quite structured. And you can imagine working with Dometic, it's not that you have 1 or 2 or 3. It's quite complex, actually. It's not that much commonality between a mature couple with an RV to Garda or younger friends going just for a weekend trip in the outdoors to have fun together. There are some things like they're wanting to have freedom and they want to have adventures and so on, but there's a lot of different things. And that requires, I think, a big part also like I says is an in-depth knowledge about our different target groups and also the way of how we put that information down, so -- and get it spread. So that with everyone, from product management, design, communication, again, we sing the same song. We have the same understanding of our target groups. I just pull out one summary, one behind me here. This is then the outdoor enthusiast, and this is a typical Dometic customer. One we love, actually. So this is the summary of that kind of consumer. And I will give you the executive summary of the summary. So these guys normally do like 4 trips per year, what we call vacation. So 4 longer trips. And then they do 10 shorter day trips. And they are completely geared junkies. They are obsessed of having the latest things, and they just want to be the first one who tries everything. So it's a great customer for us to have. And why we love them more is that they love quality. So 75% of them, 3 out of 4 wants to pay a premium price for quality, which we, of course, love. We also love them for other reason. When we track their consumer needs or their buying needs and look into what is they're actually going to purchase the next coming 12 months, you see the list on the left side. So they want to buy camping tents or -- want to, they're going to buy camping tents, folding chairs, hard-side coolers, lightning, drink and cookware, solar panels, et cetera, et cetera, et cetera. Fine thing is we have Dometic branding solutions or products for everything that they actually are going to buy in the upcoming 12 months. So that is really a good core target group for us. So all that structure, all that in-depth information are now transferred into 2 new very interesting target groups. That has occurred quite recently actually. There's probably never been as many beginners in the outdoors as there is now, which is very promising because that means there is a growth going forward. But it's also creates a little bit of specific circumstances. So typically, when you are a beginner, you are a little bit unsecured. So your trips goes not that far away in the beginning. So you see the growth in close to home traveling has gone from 13% up to 29%. What they also want is not in the extreme experience. They want to have the family and friends experience. It's more like socializing. So that fits also the pattern that you have seen before. And where we need to focus on now is then to create solutions for them that are easy to understand, easy to use, fast to use because they're doing short trips. They don't want to spend a lot of time of assembling, disassembling stuff and storage becomes key. Imagine yourself, you have your SUV or you have a passenger car, you get limited storage space. You need to have smart solutions where you storage your products. And the same thing when you come home because most of these people lives in city environments. And you know when you live in a city, storage, you always lack it. So you have to have very smart solutions. And we are working with that right now in a very good way. So this fits perfectly into our purpose or in our promise, which is then mobile living made. Another one is younger participators, which is also very reassuring for the future for the outdoor industry. So actually, the biggest demographic right now is millennials. So typically, a millennial is somewhere in between 25 to 45, and it's growing. And it's not a flash in the pan because they are actually saying that 44% are stating that this -- they will be outdoor campers for life. What I think is really interesting is this. Because normally, when you talk about outdoor or what camping or activities like that, you picture someone that is older. What is happening now is the generation set, which has then 10 up to 25, actually have a more positive attitude to these kind of activities than the older generation. And the interesting thing is not the -- it's not the extreme activities either that is driving them, it's quality time, spending quality time with friends and family. So it's the same again. So I just want to summarize, I think we have the perfect fit then for the current business moving in now to the SUV and passenger cars and also towards this new growing target groups that are beginners and are younger than before. So my 3 bullet points that I want to bring to you or as my end is that we are the leading outdoor vehicle-based equipment brand in the world. We were the fastest-growing equipment accessory brand in the U.S. outdoor industry last year. And we are expanding our potential now with a lot more vehicles than we've ever been able to service as before. So with that said, this was then from an overall perspective on more global approach. Henrik, could you tell us what you are doing with the EMEA?

Thank you very much, Peter. I'm going to guide you through some practical examples that we have been working with within the segment, EMEA, to establish Dometic as a world-leading outdoor brand. I will start at the Düsseldorf CARAVAN SALON this year. And there, we can see some practical example of the trends that we have been discussing today. The RV vehicles is getting smaller. There is a lot of panel vans, but there is also a lot of SUVs and passenger cars used as RVs. And these trends are because there is coming a younger consumer group and also fueled by the electrification. When the vehicle is becoming smaller, there is a need for space around the vehicle because you still need to live. You still need to cook and that makes a perfect fit for our equipment. So what Juan said, what we for decades have done inside the caravan and RV, we will now do outside the caravan. And there is a need for flexible and multipurpose use products. You can take our CFX3 as an example. When you're on vacation, you can have it to store your food, but you can also use it at house as a spare fridge or a freezer. In segment EMEA, we are focusing on these 5 areas to capture this trend. It's category management, channel management, digital acceleration, consumer experience and of course, people and organization. But then once again, what is vehicle-based activity? I would say Dometic has created this category. And no matter if you're out for 1 day or for a week with family and friends, there are some essential needs that needs to be fulfilled. You will get hungry. If you have your teenagers with you, you will need power. And having spent a whole day with your teenagers, you will get tired and need to rest. And then you need to bring all the stuff back with you again. And we have solutions for everything, and it should be effortless. And you might think, okay, there are plenty of companies that have cooling boxes or a barbecue. There might be some but we have a complete solution, and it fits together and it encourage repetitive purchases as well. We are dividing it into different subsegments. At the top of the pyramid, we have the adventures and the over lenders. They're a pretty small group, very technical, but extremely image driving. So it's an important group for us to be participating. Then in the middle, we have our legacy, where we have been learning and developing flexible solutions for many, many years, the RV industry. But what is for us a little bit mind blowing and where we see the huge potential is the passenger car, SUVs and Panel vans. It's potentially 300 million new customers for us to serve. And we have offering and products for all of the different subcategories. If we start with the adventures and overlanders, we have been supplying our CFX3, which has been an icon in this for the adventures and Overlanders for a long time. Now with the acquisition of Front Runner, we have even strengthened our intensity into this segment. We have our legacy, the RV and family camping, where we have a complete assortment of products. But we also have for the outdoor enthusiasts a full assortment of low spend ticket items. We have, during 2021, done a lot of mergers and acquisitions, and this is to fill the product gap. So we have done in EMEA 4 strategic M&As. They -- all of these 4 companies has had a very good growth year-to-date and a healthy profit level. Front Runner, it's a South African-based company. They are providing Sahara-proofed storage solution. They were a B2B company, but they have transformed into a B2C company. And today, we have more than 50% D2C on their own website. So we have a lot to learn from them. They are also truly global. They have sales and operations in America, Australia, Africa and Europe. We believe that with electrification and the need of comfort, there is a big use of -- for mobile power solutions. Dometic has done 5 acquisitions within this area this year, 2 of them are within segment EMEA. Büttner Elektronik is a market leader in the German-speaking area. They are supplying complete solutions. You can see a lot of companies out there supplying solar cells or batteries, but Büttner Elektronik is supplying complete solutions. So if you need off-grid solution for a caravan or for outdoor life, they have a complete solution with solar cells, chargers, batteries, inverters and the whole management system on it. We have also newly acquired NDS Energy in Italy. They have basically the same offering, but they are very strong in the Southern part of Europe. They have a little bit of a different price position than Büttner, so they are complementing each other very good. And our ambition is, of course, to keep on growing these companies. Dometic has been known to keep your food cold when you're out and about. But what we have been missing is a mobile cooking solution. But with Cadac, we have got that. Cadac is known for their quality portable gas barbecues, and they have a very good reputation in the RV and outdoor branch. And we will continue to grow their business within our strongholds and expand into our other markets. So to summarize the M&A, together with our legacy products now with the strategic M&As that we have done, we have a complete offering for the vehicle-based activity. And to fully capture these new markets and these new customers, we need also to go into new channels. We have previously had a stronghold in the camping retail and the RV aftermarket retail. But with the new kind of product assortment that we have, it's also very suitable for e-commerce. And I will come back to that. But to really capture the true possibility here, we can also move into, and we already have moved into the automotive retailers and the premium outdoor specialist. So we enter them, we cultivate them, and we will grow them. We are also differing -- differentiating our offering through the different channels in order to keep up the price position. And we have different assortment for different channels that are suitable for each and every channel. To get even closer to the end consumer, Dometic has invested in a global e-commerce platform. We have started the launch of apps in Scandinavia in November this year, and we will continue to roll it out over complete EMEA in Q1 and Q2 2022. We now have the price and product management to further capture our margins. To create pull and brand awareness, we have been working through our 360 marketing platform. We need to have the same tonality, the same message and the same visual identity in all of these channels to engage end consumers. We're also working with social media and some selected ambassadors to grow and build the Dometic community, to get trustworthy ambassadors to speak about Dometic as a brand, to give tips and tricks about how to use our equipment, and of course, we're also using social media to engage with customers and to get them further down in the conversion tunnel. Still, it's important to have physical presence. The customers need to have this touch and feel and they might want to try out. We have created point of sales material that has the same consistent message as in our other channels. And through this, we have increased our exposure in outdoor lifestyle channels to reach new end consumers. But of course, to make this all happen, the most important thing is people. We have created dedicated divisions within EMEA for outdoor. We have dedicated sales force, and we have recruited people with a background from the outdoor industry and end consumer industry. But for and foremost, they have the ambition to succeed. So my key takeaways from segment EMEA. We have created the vehicle-based activity assortment. We have resources in place with the right knowledge and ambition to succeed, and we have concluded some strategical M&As to complete the product offering. So that is mobile leading made easy for us. Thank you very much.

Thank you very much, Henrik. Thank you so much. So now it's time for a coffee break. But before getting coffee, I just want to remind you about a few things. Please spend the time and visit the exhibitions, either here or there or out there, where Richard Man is demonstrating the MoBar. We also have taken the 3 vehicles fully equipped with outdoor products outside. I see the weather is very, very nice outside as well. We also have coats you can borrow to go outside. So please take a few minutes to go out during the coffer break. And see you again at 5 minutes past 4. Thank you. [Break]

Okay. Welcome back, everyone. Hope you enjoy the coffee and the different products. So let's move on into the agenda. Now we're moving into the second block of the strategy being product leadership through innovation. And our CTO, Anton Lundqvist will help us out on this section. Please.

Hello, everybody. I hope that you had a good chance to get a better understanding for some of the new products that we are launching. In 2019, we were beginning a journey where we knew that we were struggling with product fragmentation. We had a lot of local product development, small projects, a few common processes and a quite limited global agenda, all of which factors being limiting to us when it comes to using the global synergies and making sure that we stay competitive. So we started following our strategy to work towards a much more focused organization, and this is now where we are, where we have drivers instead of being fragmented into many different countries. We have now a global organization with a drive from each of the segment to make sure that we are anchored in the commercial reality of the business. We have a clear we have clear drivers in technology. We have distributed responsibilities so that we can ensure that we reach critical mass and all of that allowing us to follow our strategic priorities. We are also introducing a global product management organization split into product and categories, also here in order to make sure that we can utilize our cross-functionality with a global drive. And again, still being strongly anchored in the commercial reality of our segments, which we think will be particularly important when we talk about some of the new growth areas, in particular, around power and connectivity, where we see a lot of possibilities around cross fertilization, where we see we have, on the other hand, the consumption of power and on the other hand, now through the new acquisition, a lot of production of power. These efforts has allowed us to spend much more time on new development. So we spent from the spending less from -- coming from less than half of our time spent on new products to almost 2/3. We are also spending consequently much less time on small changes and maintenance. We have a little bit of work still to do when it comes to primary development. We will always going to be focused on taking technology to our application, but we see moving forward that a little bit more time, we will be able to spare and put into really new development. Resulting from this is a step change in our innovation index. And as you've heard, measure the sales of products that are less than 3 years old. The real driver from a product development point of view, the real reason why we are focused on innovation index, is apart from the fact that we like new products, also that this is -- this turnaround is really what helps us to drive sustainability. It allows us to continuously reduce cost. And in addition, of course, it allows us to add new features to the product for every new generation that we are launching, which is also, of course, paramount for being and staying competitive. So where we come from and where we are now, we have continuously and we continue to work with our global platforms in all our large product areas. We continue to work with connectivity prepared. We are continuously moving into new applications and markets. We work hard to maintain technical leadership. And last but definitely not least, we have all the new acquisitions that brings us tons of new opportunities. Also, a few years ago, 2019, we showed you a number of concepts, and you have heard Juan talk about that before. But I must say I'm extremely proud of my teams being able now to have our mobile delivery solutions on the streets of Stockholm being tested. We have our Red Dot award winning MoBar being launched this year. And we have a vast program for outdoor activities that we are also launching, all of this accomplished during a fairly limited amount of time. So where are we now? I mean we do now take all we know around all our products, around applications into new challenges. So we are continuing to open the world -- to the world outside of the vehicle. You have heard a lot about the vehicle-based activities. There is obviously always a risk. What is the limitation in vehicle-based activities? Well, in principle, there are obviously no limitations, but we are very committed here to make sure that we are growing the market in the core categories where we can actually make a difference, making sure that we are adding value to the consumer experience. And we know this from our history in mobile cooling, mobile cooking, mobile power and the storage and rest and with a very effective and very important complements of the new acquisitions. That doesn't mean that we are leaving our history, obviously. As we speak, we are in the middle of our most ambitious plan ever. We are going to reformulate a complete platform on climate for recreational vehicles. We are approaching -- we are taking a grip around heating, ventilation and air conditioning, tying all of that together through our connectivity solution. And what we want to accomplish here is an unrivaled opportunity or an unrivaled consumer experience, working with performance in terms of, of course, cooling, noise and ventilation speed. We want to improve energy efficiently significantly, and as I said, already user experience. A few examples is our ventilation product, an active ventilation product combined with a heat exchanger, allowing us to save significantly amount of energy regardless if you are in heating mode or if you are in air conditioning mode at the same time, as we are improving the air quality. We are also launching new generations of speed-controlled air conditioning, where we can also here save significant amount of energy, same as the adaptive speed allows the user to control the noise and the fan speed to give an optimal experience. Looking further, we are also now starting to plan obviously around the fundamental changes following electrification of the vehicle. We have also already talked about the need for much more energy efficiency, much more flexible products. And what we believe here is that the product knowledge we have from a number of products consuming energy, we believe that the combination now with the new acquisitions where we know more about producing power will give us a fantastic opportunity. I also here want to talk a little bit about the sustainability opportunity here, obviously. A large part of the consumption of energy or if you want to call it the carbon dioxide footprint is created or is happening through the life cycle of the product. So the ability to provide the solar panel more efficient use of energy in general through our battery solutions, et cetera, give us a huge opportunity to also reduce that footprint during the use of the product. The number of new users and number of new vehicles, et cetera, should and will give us fantastic opportunities in terms of bringing new products and new solutions. And by again, tying this together through connectivity through the power infrastructure is something that we strongly believe in. Mobile power, as I said, heavily linked to sustainability. We continue to emphasize the responsibility to the society. But equally important, the internal communication is very much around efficiency. We talk about low energy during use and during production. We talk about less material, and we talk about less scrap during the entire life cycle of the product. So what we are pushing now since a few years back is that every product shall have a very clear sustainability target and really emphasizing that every project is an opportunity. There is always something that can be done a little bit better, a little bit smarter as part of combining efficiency and sustainability. And we have a few examples. We have the variable speed air conditioning winning the DAME award at the METS show earlier this autumn. We have a minibar platform, where we are combining 3 cooling technologies, drastically reducing the number of components that we are using to produce the product at the same time as we save up to 40% energy. And we have an example from the marine industry, where we are replacing hydraulic steering with electric steering, consuming 80% less power and while we are using less than half of the amount of material. Obviously, a very important part of the sustainability is closing the material loop or what we also call circularity. In many of our new products, we'll also benefit from new materials, maybe weight. It may be performance and again, recyclability. So we are going to be focusing on new materials, and that is also partly where we are seeing more efforts in terms of really new technology development, where we are seeking new partners working with this type of new technologies or new materials on the universities on the supplier side, et cetera. And a few examples is the recycled materials that goes into our cool boxes and also that has been going into a range of tents that we have launched this year. Furthermore, connect to circularity. I mean, I talked a little bit about efficiency in general, but also circularity and the life cycle focus pushes us a little bit further into the service and aftermarket, which is about extending the life through service and upgrade programs, which is by itself, of course, also an opportunity in general for us as a company. But it is also an opportunity, we believe, to increase or improve the experience of our end users. We expect through the new number -- through the new focus on SUVs, on passenger cars on the vehicle-based activities, that we will have a number of new users coming into our industry or into our realm of products. And by ensuring that products are fit for season that it is clear how to repair, that we have digital information, et cetera, around the product, we believe that, that is going to be very important in making sure that those customers that come also become customers that stay. So it talks -- it is a question about making sure that we have clear information about the installation, backwards compatibility, et cetera, that we have program for maintenance, surveys, upgrade kit and what have you. So from where we are right now, the key takeaway from my side is that we have, and I'm very proud on behalf of my teams that we have made a step change in innovation we have added opportunities to continue to drive innovation and continue to reduce complexity. We are focusing on outdoor vehicle-based activity products with a certain special focus, as you have heard already, on mobile power solution and last, again, but not least, sustainability with life cycle in focus. So we are very much looking forward to bringing new products to the industry, enhancing the experience for all of our end users. And by that, I want to welcome Eva to talk a little bit about cost saving.

So cost savings, cost reduction, it may be not the most sexiest part of our strategy to give an update about, but it is as important so that we can continue investing in these. You heard my colleagues. They are just spending money. So new products, acquisitions and all that. So we have divided our industrialization journey into 3 steps: the 2 first steps is about complexity reduction, where we are reducing number of stock keeping units, number of sites, number of suppliers, number of components, et cetera. And these 2 first steps are followed by the last step where we are optimizing throughout the whole value chain of operation, introducing methodologies, tools, automation to be reaching the excellence in operation. To be able to do that, we have strengthened the operation organization and we have today process owners that are coordinating and driving this work throughout all the segments, but together with the segment's operational management. We have -- so where are we today? When it comes to the SKU reduction, you can see here that we have exceeded the target that we set at the end of this year, 40% compared to 2018, and we are today on 59%. However, we've done the easier part. We focus on the low -- very low volume stock-keeping units that we have, so to say, cut the tail. And now we have moved into more the structural part and structural reduction. You heard my colleague, Anton, talk about, we are talking about global product, global modular platform design, share technology across the segments and introducing life cycle management. Why it's so important with the SKU reduction is obviously clear that it reduces complexity cost. However, it's also very important to optimize our inventory that -- so that we can increase and improve our delivery performance to the customers. But also, we are releasing space and therefore, get a more healthier footprint, a more sustainable footprint. Strategic sourcing, we have started the industrialization in this area. With that, we have -- actually here, we have appointed people in the segments to be responsible to coordinate and drive this industrialization work across the group. That is because we -- that's -- we see that as a chance for people to develop, but also to get more not just a segment view of it, but also the total group and see the potential of synergies. We have too many suppliers, which is creating a lot of complexity, also do not give us the best sourcing power. So also here, we are focusing on cutting the tail, all the low -- small suppliers. And then we are -- parallel with that, we are consolidating the bigger spend suppliers to increase our sourcing power further that we do through category management. So where are we? I would say that we are halfway through. We set the target to half in our supplier base till end of 2023 compared to 2018, and we are halfway through there in that work. But to be able to reach the target here of 50%, we are investing even further into category management, where we also here have appointed people across the group to drive and coordinate this across all the 4 segments. When we are consolidating the suppliers or moving the suppliers, we are seeing another opportunity, additional opportunity to optimize our costs by moving a bigger share to low-cost countries. As you see on the graph, we have already started the journey where we've started having 50% of our material spend in low-cost countries. And today, we have 63%. But to be able to reach the 80%, we have invested in sourcing organization in all the 3 continents. So today, we have a sourcing organization in Mexico and in Hungary, besides the low-cost countries sourcing organization that we had in 2018 in China. So today, when you talk about those 3 locations, our sourcing organization stands for 64% of the total headcount of sourcing organization. So we are much more fit now to be able to support this target of 80%. This is an important picture. It's our manufacturing footprint strategy, and I want you to look at in the middle of the picture where we say regional assembly plants. We want to have the final assembly as close as possible to the customer. That make it possible for us to be able to offer high variances products to customers. However, as I talked about before, we see an opportunity to cost optimize but sourcing much more together across the segments, components as well as modules in low-cost countries. Q3 2019, we announced a cost reduction restructuring program, which was going to generate SEK 400 million annually saving. We have -- we are 1/3 through with that program. And unfortunately, got a bit delayed through COVID or by COVID. However, I want to make sure you know that we have right now full speed ahead to complete this program, and we estimated to see the full effect of this mid-2023. We talked about sustainability before, and we have here 4 KPIs where we see good progress on all 4 KPIs. The 2 top ones we are measuring versus 2018, where you can see that our injury rate has reduced from 3.7 to 2.4. We also have increased the share of recyclable waste from 68% to 80%. The 2 bottom graph is showing that we -- the left bottom one, we have audited spend on low-cost countries' suppliers. Here, obviously, the COVID has made it a little bit more challenging for us to be able to visit all the suppliers and do audits. However, we are targeting to get to the 90% at the end of this year. And last not least, CO2 tonnage in relation to sales. We introduced this KPI last year. And here, we have a progress already moving from 2% to 1.7% this year. And as you already know, as I've mentioned, we have the ambition to halfen this long-term target to 2030. So to sum up all the numbers I showed through the presentation, I would kind of sum up that, all in all, a good progress. One KPI that I maybe didn't mention much is that we have also a reduction on number of sites, and that 22% is actually valid for both our total number of sites as a group we have reduced with 22%, but we also reduced our number of factories with 22%. So to sum up cost reduction, we had a good progress in complexity reduction. But being in an acquisitive company, it will, of course, never end. It will be a continuous journey. Cost reduction program, we are 1/3 done, but full speed ahead to complete. And we had good progress in sustainability, and it really is something we work in having been part of everything we do. Thank you.

Thank you very much, Eva. I can put it here. So very good. Thank you so much. Now we've been talking about growth, we've been talking about innovation, and we've been talking about cost reductions. Now our CFO, Stefan Fristedt, will summarize all this in a financial update. Please, Stefan .

Thank you, Rikard, and good afternoon, everyone. So I will now start off the last formal point on the agenda, and I will start to talk about some of our key financial trends. And the trends, they are showing an underlining that we are moving Dometic towards achieving our long-term financial targets. Net sales has been showing a cumulative aggregated growth of 10% measured since 2017, and a little bit more than 4% of that is coming from organic growth. Both of these KPIs are close to our long-term targets. Continuing with EBIT and the development of our EBIT margin, we can see that our efforts in implementing our strategy is starting to pay off in that we can see positive margin development despite that we are having some headwinds related to FX and trade tariffs. Dometic has historically had a rather strong cash flow profile with cash conversion well above 80%. In 2021, we have seen a development in the working capital, which is a volume-driven growth of working capital, but also related to our supply chain constraints that we have been talking about in our quarterly reports. While at the same time, working capital in relation to net sales is moving down towards 21% coming from 23% in 2017. Seasonality and business mix is important factors to understand domestic and the development over the quarters in a year. Expansion in Outdoor and service and aftermarket will reduce cyclicality. However, Dometic will continue to have a rather clear seasonality pattern. If we take Q2, for example, which is typically our strongest quarter, we have the highest amount of sales and we have the lowest share of OEM business, whereby we have the opposite situation in Q4, which is our weakest quarter. Looking into Igloo, which is starting to come into our books from November this year, we can see that Igloo is having an even more significant seasonal pattern where they are extracting approximately 2/3 of the annual sales in the first 6 months and where they only have 14% of the annual sales in the fourth quarter. So the expansion into Outdoor and service and aftermarket will reduce cyclicality, which you can follow in the graph on the left-hand side. By continuing to focus on the development of the service and aftermarket offering, we will make that business even less cyclical going forward. Igloo has shown a rather low level of cyclicality over the last 15 years, where they have been showing a stable 6% compounded aggregated growth. When we meet you and others, we often get the question about the relative profitability of our various channels. The picture to the right, you will be able to see that service and aftermarket is our most profitable sales channel followed by distribution, and they are both above the domestic average. Total OEM is below Dometic average and specifically, RV OEM is our least profitable channel in the company. So coming back to the tracking of our profitability development, which I did touch before. But if we are looking on the underlying trend, it's no doubt that we can clearly note improvements. Starting off with the LTM margin from Q3 2017 of 13%, we can see that the headwind on FX and trade tariffs has taken down the margin with approximately 1.7% units. But then looking on the rest of the development, it's actually rather impressive because we can see that we have a 3.2% total improvement related to 4 areas. First of all, we have the area which Eva was talking about. We have so far delivered approximately 1/3 of the cost reduction program that we announced in Q3 2019. We also have seen a strong growth in distribution and service and aftermarket, which has created a favorable mix effect in our profitability. Then we have the third area, which is driven by the organic and the acquisitive growth, which we have done since 2017. Then we have also decided that we would like to reinvest some of our improved margin especially in strategic important activities like business to consumer, outdoor, other global verticals, but also in areas which Eva and Anton was talking about, for example, connectivity in Anton's area and the sourcing organization that you were talking about, Eva. Going over to the financial position and the net debt leverage. As you all remember, we did rephrase our target around leverage earlier this year. So the target is now around 2.5x when it was before that around 2x. This is to better support our strategic execution as well as better aligning with the historical levels that we have seen on leverage. 2021 has so far been a rather busy year in terms of financing. As you remember, in the beginning of June, we did do a directed new shares issue, which raised SEK 3.4 billion of capital in order to support our acquisition agenda. We also took the opportunity to prolong our EKN loan with 2 years. And then at the end of September, we issued a 7-year Eurobond of EUR 300 million. I must say that the interest and the response that we have seen in connection to the above financing acquisitions has shown a strong support from you in the investor community. And I think that you also have given us a great trust in our strategy and in our strategy execution. Looking forward, Igloo and Cadac, which will come in higher now during the fourth quarter, is going to add approximately 1.3x to our leverage, taking the leverage to approximately 2.8x when we come to the end of Q4. Then you know Dometic as a company with a rather strong de-leveraging profile, de-leveraging approximately 0.6x to 0.8x per year. And that is a development that we are planning to continue. If we look on the debt maturity profile, we can say that it is healthy. We have taken it from an average of 2.6 years in 2018 to currently 4.3 years as we stand here currently. At the same time, the average interest rate of the debt portfolio has been coming down to 2.34%, keeping in mind that the new 7-year Eurobond that we issued in September is carrying a rate of 2%. I'm also happy with -- that we have a diversified source of funding in place, talking about our EMTN program, talking about our undrawn revolving credit facility. We have bank and EKN loan facilities, and we also have an unused certificate program. Coming over to working capital. Our loan -- or I should say, our medium-term target is to achieve a stable level of 20% working capital in relation to net sales. This year, we have seen a volume-driven working capital growth but also impacted by the supply chain constraints that we are seeing around the world. So what are then the building blocks for us to achieve a 20% stable KPI of working capital? First of all, it is the strategy to focus on lower vertical integration and a higher level of regionalization. We also have the management incentive schemes including a not-insignificant cash flow component. We are strengthening our supply organization and our S&OP process. We are continuously working on improving the processes on the trade receivables side and working on extended payment terms for trade payables including the utilization of bank promissory notes especially in China. So Dometic has decided to change its main operating profit measurement from EBIT to EBITA as we believe that EBITA is better aligned with our strategic agenda and gives a better view of the actual development of the business. 16% to 17% EBIT margin is equivalent to 18% to 19% EBITA margin, so there is no change in the financial targets. There is only a change in the financial measurement. And we will start introducing EBITA when we are reporting the fourth quarter in the beginning of next year. So talking about long-term EBITA target, how are we going to get there? So if we take the starting point in the EBIT margin from Q3 LTM this year, we convert that to EBITA, which means that we are on 16.1%. And then we are also in the next step including the pro forma numbers from all the announced acquisitions that we have done over the years. So then we have a new starting base of 14.6% EBITA. So what is then going to happen to take us to the 18% to 19% EBITA target? First of all, we have to deliver on the announced improvements and synergies related to the Igloo acquisition including the effects that we will see of the pricing that has been implemented during Q4 and will continue into next year. Then we have to deliver on the remaining part of our MFP program, where there is still outstanding SEK 250 million, which we are planning to deliver by mid-2023. And then last but not least, by continuing to deliver on our profitable expansion and innovation strategy, we will achieve positive sales growth and mix effects towards higher-margin markets and channels. Diving in a little bit more to the Igloo financials. Our long-term ambition with Igloo is to take it to at least a 15% EBITA margin within 5 years. As you know, the transaction closed on October 26 this year, and we are then planning to include Igloo from November this year. Igloo has a strong seasonality profile, as I mentioned before, so they only make approximately 14% of the annual sales in Q4. Historically, Igloo has made a loss in Q4, while Q1 and Q2 are the 2 strongest quarters in terms of profitability. Looking on the sales development in Igloo using the Q3 LTM number, we see that Igloo has been growing the business with 21%. And over a longer period of time, they have been delivering a stable growth of 6% over the last 15 years. Moving over to the profitability side. The Q3 LTM EBITDA margin is 7.4%. That is lower than the 10% that we communicated in the press release around Igloo. That was then based on the July LTM numbers. And here, we have the LTM numbers of September. The profitability has, in the short term, been impacted by rising resin costs. Then this rising cost, they will be compensated by already agreed and communicated price increases that will start to kick in into Q4 but also continue into next year. Then we have the synergies. Juan has already touched on them. They are USD 53 million to be realized within the coming 5 years. And they consist of 4 different blocks. First of all, it's Igloo stand-alone improvements which is going to show both on the commercial side and on the cost side. Then we have the portfolio synergies within U.S., where we will see effects both on the Igloo side and on the Dometic side. Then we have the part of taking Igloo globally, talking mostly about EMEA and Pacific. And then the smaller part is related to cost synergies. Moving over to our long-term financial targets, which we are to achieve over a business cycle which we define to be approximately 5 years. So the net sales growth of 10%, including both organic growth and M&A growth; EBITA margin, as I mentioned before, 18% to 19% to be achieved over a business cycle; net debt-to-EBITDA leverage around 2.5x; and the dividend policy stays as it is, which means at least 40% of the net profit to be distributed to the shareholders. Then we have a couple of capital allocation principles to support our long-term value creation. Talking about CapEx, we have been historically over the last couple of years been showing an average of 1.7% of net sales. We believe that, that needs to increase somewhat and end up somewhere around 2% to 3% driven by our digitalization efforts, also by Igloo-related investments partially offset by less investments in our legacy manufacturing structure. R&D, we are currently around 2%, and we believe also that, that is going to increase to somewhere 2% to 3% of sales. And that is to support the innovation agenda to drive growth and efficiency. So 2022 is around the corner, and we have some market and industry data indicating a couple of things. First of all, we know that the retail inventory levels are on historical lows. So that would indicate that there is an inventory replenishment cycle that needs to be completed. Raw material and transport constraints is going to remain into 2022. We have COVID-19 restrictions, and we also see that there is a high M&A activity in the industry. So what does that mean for Dometic in 2022? We will continue to drive growth in strategic areas. We will have to balance the market demand with supply capacity. We will also need to increase the activity on the cost reduction programs and then, of course, secure value creation from announced acquisitions. And then last but not least, we will continue the acquisition journey but, which was also mentioned before, we have started to look into divestments for businesses that is not fitting into the long-term strategy of Dometic. So the three key takeaways. Our financial results show a strong improvement supported by our strategic action. We have a solid financial position. And we are committed to our financial targets, and we also have a robust plan on how to get there. So with that, Rikard?

Thank you so much, Stefan. You should stay here with me. And I would also like to invite Juan up on stage. It's time for the Q&A. Excellent. And through our help, we have [ Reman ] with microphones. So if you have a question, please raise your hand and introduce yourself and ask your question. We can start here. Gustav?

Gustav Hageus with SEB then. If I might start with sort of the last slide on R&D, your ambition here on going from 2% to 3%, I'm asking, is that -- is there no way to sort of accelerate that transition further? What is your return on invested capital in R&D? I'm looking at some Nordic peers that have significantly higher R&D spend. Even Electrolux, I think, has higher than 3% now. So that would be interesting to hear your thoughts.

Yes, I don't know. I mean, I think as Anton has been alluding to here, I mean, it's not only about how much you totally spend, it is also about how you get the biggest possible effect on what you are doing. And recognizing the same thing from my previous company, some of the problem seems to be that you are running too many projects in parallel and that you need to focus on the things that is really making a difference in the better end. So our assessment as we are here today, we believe it's going to be enough to spend 2% to 3% of net sales in R&D to achieve our strategic agenda.

I think as Anton mentioned, we have seen a step change, but it is not that we are perfect yet, so we still can become more efficient than what we are doing. So there is so much space. So on one side, we are going to obviously invest more in some of the new areas, especially in electronics, power and energy. But at the same time, we can do even more in our globalization efforts as we have been doing until now.

Might I have one more or -- regarding, sort of, the factory footprint and going from 27 to 21, is that -- since you acquired a few businesses along the road, if you could clarify a little bit what the net closure number is.

Well, we have -- again, excluding acquisitions, we have reduced 22%. Then you have one factory more in Mexico, in Tijuana, and then you have the factory in Texas. Then you have one smaller assembly plant in Oregon. So that's it. All the others are not producers. They are system integrators.

Linked to that, I'm thinking there was not a lot of discussion here on sort of automation or lowering the number of factories dramatically, seemingly. Is that something that is still sort of 5, 10 years down the road for you to go to maybe single-digit number of factories like...

No. But I mean, first of all, we have still today a restructuring program that we are running, and we are not done yet. So obviously, that's the first step. Then we always communicated from the beginning when we introduced that program, that will not take us to the end game. It is clear that the more you acquire, the more complexity you are also acquiring and the more we will need to continue to work with those [ questions ]. But again, if you look at all the acquisitions that we have done, we have a factory in Texas, which is crucial for us and that will help us to regionalize part of what we are doing today in Asia, meaning reducing tariffs. So that's one. The factory in Tijuana in Mexico is totally dedicated to Valterra, which is service products, so we have no obligation whatsoever. And then the other one in Oregon, that's the only small assembly plant that we have for solar panels in Americas. So I don't see that those 3 will be affected. On the contrary, we still have a part of the legacy Dometic that will be affected.

And final one for me. You mentioned that you're rolling out now DTC a little bit more in Europe next year. Could you get an update a little bit on the number of doors or points of sales you have now? And if you feel that there's a conflict in terms of pricing and so forth, if you start to get a little bit more pushy on your own channels.

So I feel that the last, I think it was Q3 or Q2, we communicated a number of doors pre Igloo.

Q3, we did. 4,400 something.

Yes, exactly. So it has been growing dramatically in the last 12 months. And then of course, does globally -- then of course, Igloo is opening a totally different magnitude. Igloo alone has 90,000 doors just in the U.S. So that's what we believe that Dometic can get a totally different presence on the U.S. market especially on the sporting goods area, where we are into a number of the prime chains, but there are many more chains to conquer for Dometic. While in Europe, still today, we got a number of doors through the Front Runner acquisition. We got a number -- an important number of dealers through both the NDS and the [ Büttner ] acquisition, and we will keep developing that part of the business.

And in terms of the inherent conflict between rolling out DTC and making sure to keep your doors happy, how do you feel that's going to...

I guess that it's no different to us than it is for any other company, no matter we are talking about [ HM ] or Volvo, right? I mean somewhere you need to make up your mind on where do you want to be in the future. And it is clear that nobody can stop Internet and online shopping. On the contrary, the question is where is the right balance? I mean we see, if you take one of our competitors, YETI moved from 8% e-commerce to 54% e-commerce in 6 years. As you saw, we are not communicating 54%. So of course, we are in the starting phase of our journey. We believe that we are going to move fast as we are rolling out this market. And of course, that you might get some conflict of interest. We will do anything we can to minimize the confit of interest. But at the same time, we also need to look at the upside. And the upside is obviously that we have much higher margins and we are in control of destiny. And then it's about finding the right balance.

What I'm asking is YETI is, I guess, U.S. based. In the U.S., you can decide what your retailers would sell your products, what price they will have. But in Europe, in my knowledge, you cannot. So will you be price competitive in Europe?

No, everything starts with the list price. Everything starts with list price. And then you need to look obviously what they are buying, how often they are buying. We don't have the intention of selling all our products through e-commerce. I mean, first of all, we are not talking about installed products. We are talking about the stand-alone products. So that's why it fits perfectly to our outdoor initiative.

Okay. Next question, kindly give it to Agnieszka.

Agnieszka Vilela, Nordea. I have some questions for you. So starting with your product portfolio, you did a great job building up your product portfolio for the vehicle-based outdoor. And you said that in EMEA, you basically don't have any white spots. So my question is, looking forward when it comes to your M&A priorities, where will you go?

I think they are very, very clear. I mean we have no white spot just now in EMEA, but we still -- I mean it's difficult. My experience is that you cannot just take -- if you take Cadac, Cadac is a fantastic acquisition as a starting point for [ hot ] in Europe. But it's very difficult to get a company into the U.S. where you will find another 20 different competitors doing similar products or to take it to Australia. So that's why we're saying that our acquisition journey is not over. We need to get not just products, we need to get channel, we need to get a market position, and then, of course, we need to find the synergies on the backside that when we are looking at manufacturing, when we are looking at product development, when we're looking at sourcing. So channel -- acquiring channel is crucial for us when you're getting to new territories, otherwise, it takes decades to be [ at top position ].

I mean, a good example is what we have done on mobile power solutions. I mean that's a journey that could be repeated in some other areas as well.

So that's -- I think that's an important -- very important differentiator between the way that [ we ] see from outside. I could read Dometic historically in a new way. We are not interested in local positions. We're interested in global positions, which is, of course, a combination of many local positions. But I cannot see Dometic being #1 in Europe but non-existing in the U.S. or non-existing in Australia because what would be the point of having Dometic.

Great. And then taking another look at your portfolio, you are saying that you are doing kind of strategic review continuously. Can you share with us what parts of Dometic could be divested? Is it a large part of the group? Is there anything that you would sell?

I think -- I mean, of course, I mean, you see -- you realize the kind of ambitions that we have in terms of growth and in terms of margins, right? So of course, when we are looking at our portfolio, I guess that the first steps that we're going to take are a low-margin business, [ known-growth ] businesses, especially we are talking about low OEM business not driving Service and Aftermarket. You have a low margin in a onetime transaction. Is that part of Dometic? It made a lot of sense 15 years ago when we were into one vertical market. But today, we have so many choices. So we are doing everything we are doing just now is about repositioning the company to reach high levels of performance. And that means adding more of in some areas but also obviously divesting in some of the areas that are not interesting any longer.

I have 2 more questions. I would like to understand Igloo a bit better, and I couldn't really get to the same number as you when it comes to the market shares because when we look at YETI and their exposure in the U.S. and cooling boxes, it seems like they have probably -- you say you have 1/3 of the market with Igloo, and they have more than 1/3. So I don't know, what are the other competitors...

Yes. So YETI is about 45% coolers. Out of the 45% coolers, above 30% is soft coolers, and then you have about 60% hard coolers. What they have is, obviously, they have a much higher average price. So if we are talking about dollars, dollar-wise, Igloo is 32%. It's not our numbers, it's NPD, which is a formal association collecting data. And I think Yeti is on 13%, 14% market share on value in coolers.

And you took the hard coolers?

Yes.

Okay, sorry. And then you want to take this company from like probably 5% EBITA margin now to 15%, so I think it will be very important for us to understand these building blocks towards that margin. What is most important, in your opinion?

I think you have really two important components that they could do themselves. One is innovation, is really moving from being a good company with a part of better to become a better company with a part of good. So that's one, so the repositioning within the product area, so to say. And I think from that perspective, YETI has created a fantastic opportunity because the entire industry is moving upwards, so to say. So that's one. The second one is the e-commerce. As I mentioned before, YETI started 2016 implementing e-commerce and went from 8% to 54% during the last 6 years. Well, Igloo started 1 year ago, and they are running just now 9.5% of the revenues. And you can imagine what happens with the margins, obviously, what they are doing so. Then you have technology. I mean we know the kind of margins that we are doing on our products including in the U.S. on cooling boxes. And we know that Igloo can become a fantastic tool to really migrate the market from passive coolers to active coolers. With the active coolers, you get a totally different market position where we are very much alone. So that's a fair component. Then we have pricing itself as well. I believe that we can be even smarter than we are today. And then you have the other synergies, which is how do we help Igloo to grow. Funny enough, they have just 8% of all their sales outside the U.S. They have one person taking care of the rest of the world. We have almost 10,000 employees around the world. So it's not the same as you are going to open a new subsidiary in a new country where you need to start with 5 people and no sales than when we have a company that can host one salesman. We have already our warehouses. We have the infrastructure in place. Hopefully, we will support that development to other margins as well. Keep in mind that the U.S. is the most competitive market in the world.

Great. The very last for me. You mentioned in your press release the semicon shortages and that [ troubles ] are accelerating for you. So how worried should we be that you need to close your factories? We noticed that some of your customers are talking about quite substantial sales shortfall in the coming quarters. So what's happening there? Do you have any visibility?

I mean visibility, it's not very high. It's kind of moving every second week. Every second week, you get up with a feeling. And then every second week, you get a feeling of things are deteriorating again. We don't have any factory that we see today just shutting down, but we have shortages. And those shortages are, kind of, changing for some products. They are more common than for others. We are working as much as we can obviously to -- in different areas. I mean, one is sourcing, spot buying, but another initiative that we have clearly is can we respecify the chips. So we can use a different chip. The problem being that there is no warranty because when you have tested the new chip, you might be in a situation when then you have shortages for that specific new chip. So just now I think we are no different to any other company using electronics. It is tough. It's a tough environment. And I mean, I want to take the opportunity to thank Anton, Eva and the teams for the fantastic job that we are doing because it is tough as in many other industries.

Daniel?

Okay. All right. Daniel Schmidt from Danske Bank. A couple of questions from me then. We've seen this, sort of, quite substantial boost when it comes to end market demand, of course, helped by COVID. And then, of course, you have this very low inventories that you mentioned, Stefan, and the need for replenishment. But you haven't talked that much about what you think about end market demand in '22.

Yes. No, but I think we can definitely conclude that we believe that the end market demand is going to be there. We think that staycation is not a trend that will go away. It will stay in place. And boost from, yes, the pandemic impact of things but also in relation to that, people maybe think more than one time before they jump on an airplane 4 times a year to Thailand, they would like to spend the vacation in a more sustainable way. So I think we are right in the spot of capturing that end market demand that we believe is still going to be there. But then, I mean, I can appreciate that there has been a spike driven by the closedown by the pandemic, and that will, of course, normalize over time. But we are still very optimistic that we will see a continuous strong end market demand.

And speaking about demand and sort of mix shift and I think Henrik was showing a pyramid of sort of land -- overlanders, RVs and SUVs. And it's been very clear that it's been a mix shift within RVs when it comes to camper vans versus motorhomes, and you're trying to mitigate that with these 2 other categories. Would you say that, that shift is going to be easier for you next year if that continues at the same pace given that you have more products in the other areas?

I mean to me, here -- I mean, this -- what we are doing now, we didn't start last month or not even before the pandemic. I think we met you guys in May 2019, and I believe that we were very clear. That's where we saw the market. What we have done during the last 2 years is that, all of a sudden, we have a very, very sharp view of the market because the market has been great during these 2 years, even more. So 2 years ago, we had a partial product range. Today, we have a much broader product range. 2 years ago, we didn't have such a brand for outdoor applications. We were still perceived by the market as a supplier of devices. We are becoming much more a stand-alone company. So I believe personally that for every day is going to be easier and easier. And you know what? I think one of the fundamentals that all of a sudden, all products are seen, are visible. Two years ago, we were the major company in the world, right? But if you take 50 million RVs as the entire registered base, multiply that by 4 people in a factory -- in a family, how many people are familiar with the brand, 60 million, 70 million? The kind of market that we are approaching now is a different ballgame. It's a different magnitude. So I think that what we are doing, the way we are communicating with consumers, we are creating pull instead of push. For many, many years, we were pushing products through the channel. Today, we are attracting people to the channel, consumers to the channel. So the answer is yes. We believe that.

And then just, you talked a lot about more about divestments now than you did 2.5 years ago. And you mentioned it also in the Q3 report a little bit more for the first time, again, I think. And you talk about it today. Do you think there's any paradox when it comes to your growth ambitions and how does it stack up against these 10% that you want to achieve over a business cycle?

Not really. I mean, of course, that we are interested in keeping areas showing growth, structural growth, and we are interested in keeping areas showing a good margin profile. So I don't see that.

So it's more about redeploying that divestment into -- yes, all right.

It's the other way around. We see that there is a need in any single company. Strategy is about making choices. It is more of and less of. And we see, again, that what fit the company 15 years ago perhaps doesn't fit any longer. That 15 years ago, we might have got businesses or an acquisition where you have 75% right but 25% was not fitting, that the company has tried to expand those 25% in a number of years, and we [ haven't managed ] so why should we keep it instead of finding a better home? At the same time, as we are financing additional growth organically or through acquisitions, so for us, it's about deploying all our resources. I don't see any drama. It's more doing what many other companies are doing and refocusing and repositioning the company. Thank you.

More questions? Got one here.

[ Daniel Johansson ] from Technical Advisers. I just have a couple of clarifications on the margin waterfalls. So on the long-term EBITA target, where you show a headwind from pro forma including acquisitions of 150 basis points, is that to say also that under the old definition of the EBIT margin, it would have been 13.1% instead of 14.6%? Is that a fair...

Yes, I think that would be fair -- would maybe have been even more profound because you also would have included the PPA effects obviously on an EBIT basis. Now we're talking about EBITA basis, and we know that for the time being, we have a certain dilution of the acquired margin related to Igloo. But as Juan mentioned before, on the rest of the announced acquisitions, we actually have margins that is above the Dometic average.

And in this illustration, is that with Igloo's margin at 7% EBITDA or 10% EBITDA? Or what is the margin in Igloo in the pro forma numbers here?

It's basically based on the LTM numbers from Q3, which was 7.4% EBITDA, which is equivalent to a little bit less than, what is it, 3% to 4% EBITDA margin.

Close to 4%.

Yes. And okay. I do understand that it says illustrative here because it's in the future for the margin target to be reached. But on the previous waterfall chart tracking towards our financial targets, it also says illustrative. And is that because these are estimates? Or how to read that chart?

Yes, but it's to show the direction of the development and that we decided to do it in an illustrative way rather than putting in the exact amounts. But the total margin effects of minus 1.7% and plus 3.2%, I mean they are actual.

And lastly, there was a comment made that [ OE ] is 27% of sales, 10% of EBIT. So that corresponds to roughly 5%, 6% margin there, whereas the rest of the business has more than 18%. Is that roughly right?

You just seem to have a good calculator. But then you need keep in mind, it's varying between the geographies, as I said as well, on the [ OE ] business.

[ Marcus Andrea, Penser Bank ]. I have a couple of questions about -- first, starting off with the 300 million vehicles opportunity that you're talking about, can you talk a little bit about where do you think that going? How do you see that panning out? I mean have you done any consumer surveys, et cetera. So how much of this vehicle part can you see buying your products in 5, 10 years? Just what kind of road do you see ahead for this opportunity?

I feel we can go back to Peter Kjellberg's presentation. We have done quite a bit of market survey. Then of course, it's a growth market. There are not clear structures to find out. But I mean, with that population of cars, you just estimate that we could reach 10% to 15% of those cars. We are going to expand the market many times more than we are doing today, crystal clear. And we see that, that population is growing. We see the demographics are changing. And we see as well that the other vertical that we are looking at, the company industry, the company industry has been showing a very nice growth profile during the last 7, 8, 9 years. So again, pandemic 2020 kicked in and drove the numbers even higher. But even pre-pandemic, the organic growth in the [ company ] industry worldwide is 6%, which is obviously far away from any other vertical markets.

And is it possible to say or have you published or can you give us an idea how many of these tents, for instance, are you selling today?

We have not published and I wouldn't say the number at this point. I don't have it on top of my mind. That's a new product for us. So well, the inflatable -- yes, the rooftop tent is a product that we introduced 1.5 years ago, so it's still in the starting phase. But these are fast-moving market, so you can find companies around the world growing from nothing to 20 million, 30 million, 40 million dollars or euros in 5 years. So the demand is growing dramatically on those kind of applications.

Okay. My second question is about supply chain. So how do you -- I mean we have a disruption of supply chain which started way before COVID with geopolitical risk and the conflict between China and U.S., et cetera. So how do you think about these questions long term in terms of second sourcing, in terms of building inventories, et cetera?

That's a very good question. I mean, first of all, we started regionalization of Dometic already 3.5 years ago. So we opened up our factory -- our newly opened factory in Mexico in January, February 2019. And we were opening a factory in Mexico, but the intention for us was to move manufacturing from U.S. to Mexico. And then when the tariffs were announced, we decided obviously to start moving manufacturing from Asia to Mexico first. So we believe in the regionalization of the businesses. We believe that China has been a fantastic place from a manufacturing perspective for many, many years, but China has become more tricky. China has become expensive. You are far away whenever you have a product launch, something happens during the beta test, and then you need to wait for another 6 or 7 weeks. [indiscernible] is low, and we are in a fast-moving environment, so we need to regionalize no matter what. Then the other one is that Eva share with us about complexity. We have -- even after reducing 27% number of suppliers, we still have 3,000 suppliers. And many of those suppliers are supplying 1, 2 components to us. So the entire intention strategically for Dometic is really to reduce the number of suppliers big time. At the same time as we are reducing the risk by moving into double sourcing; and for some components, even triple sourcing. And many of these components will be on the regions and not just on one spot. So it is really about becoming more flexible at the same time as we have more purchase power than we have today. Did I answer your question?

Yes, you did.

More questions. That's good.

Christer Magnergård from DNB. Just a very short follow-up question from Daniel's question on the waterfall targets, also the illustration you had. In the picture from 2017 to 2021, you had one bar that it was strategic investments that was quite clearly negative, that took away basically all savings. In the other slide, that kind of disappeared. So the question is, is -- the strategic investments, will that be on the same level as a percent of sales? Or is it just included in sales mix, organic growth?

No, but I think we are certainly going to see generally a bit of a transformation of the -- how the P&L looks like within Dometic because as we are going to grow our B2C presence, we are going to take the step from 3-step to 2-step distribution. We are going to see gross margins going up. At the same time, we will have to invest in SG&A to be able to achieve this growth in these channels. And in terms of B2C, you need to invest in getting customer traffic into your sites, and that's a little bit of a balancing act how much you are going to spend there. But I think that you're going to see over time a rather significant improvement in the gross margin. At the same time, you're going to see that we're going to spend more SG&A in relation to net sales to be able to accommodate that but a net positive on the EBITDA margin.

So just coming back to fill in, if you look at the [ RV OEM ] industry, it's not very sophisticated, right? You have 20 customers basically per continent. So [ RV OEM ] means low margins, lower G&A. If you are moving into direct sales is the other way around, is high margins, higher SG&A. The balance is positive for Dometic.

We have seen other companies in the consumer industry doing the same kind of journey, but where the gross margin tends to lag a bit on the SG&A compared to SG&A costs, is that fair to assume?

Yes, of course, if you are building up as we are doing a B2C e-commerce organization. Of course, then you have the cost but you have the revenues. If you are doing as [ Henrik ] is doing, building a direct-to-consumer sales organization within outdoor, of course, then we need to have people, and it costs some money without having full effect of the investments. So it takes a while. But that's why we are also working very, very hard in many other areas, so we can fund those, kind of, investments. So I think it's a very, very important point that Stefan is trying to make. Our P&L will look dramatically different in a few years from now. Margins will be much higher than they are today, but SG&A will be also significantly higher than it looks today.

Good. Henrik?

Henrik Christiansson, Carnegie. Two questions. First one on this direct sales push, if you could give a number what share of sales today is direct to sales and where do you see that share being in 5 years' time?

So we had it in one of my slides, obviously, it was too fast. So today it's 4%. We want it to be 20%.

Great. Then the other question on your product offering. You showed a lot of nice products, product suites supporting this mobile land-based vehicle outdoor activities. You haven't talked much about the marine side, which is still a meaningful part of your sales. There's also a push on the marine side to go electric. You have SeaStar, the more engines, the better for you with your electronic steering systems. Could you talk a bit about your product offering and suite and how that is exposed to an electrification on the marine side?

I think we have been doing with this in the last -- well, since the acquisition is really moving more and more from electrohydraulic technology into electronic technology and electric technology. I think Anton had in one of his slides, one presentation, one of the products that we are launching. So of course, that electrification is starting to kick in, still on a very small basis. But it is the same, I can tell you that we have already, as part of the integration process of the mobile power solution companies is a discussion with SeaStar because we want to be part of that as well. Other than that, Seastar is showing a very, very nice development both in sales and in profitability. They have a pretty substantial pipeline on new products. Today, we wanted to really put the emphasis on outdoor. But it is not that we are not interested in marine. Marine is an extremely interesting market for us. And one of the reasons for that is that it's very high service and aftermarket business. So it's not just that this high-margin business is also that drives a lot of service in aftermarket, which helps additionally the margin growth. We have a lot of innovation in SeaStar, but today, that was not a target. Target was outdoor.

So what would you say that the electrification of marine, would that be an opportunity positive? Or would that be something that you consider a threat?

No, I think it's going to be positive for us as well because I believe that we are very well positioned that we are very, very close obviously to the engine manufacturers, that we are very close to the OEM manufacturers, and we feel that we know pretty well what is going on and that we are positioning ourselves.

Karri?

Karri Rinta, Handelsbanken. First, a clarification on the EBIT margin bridge slide, you say there that it will take 5 years to reach this EBITA margin target because there was something about 5 years included in the slide. So I just wanted to clarify the time frame.

You answer or do I answer?

Can you repeat the question, please?

So was the EBITA margin target slide showing how you expect to get to 18%, 19%. I think there was a 5-year mention there. So are you saying that it will take 5 years to reach that margin?

I think the financial targets should be seen over a business cycle. I mean everyone knows that every single year is not as good as the other. It goes a little bit up and down even though what we are doing is, of course, going to reduce cyclicality quite a lot. But we are already on the journey. The journey is, of course, adjusting all the time because now we have just acquired Igloo. We took them over 1 month ago. And then, of course, especially for the Igloo improvements, we are going to start where we are here now, and we have communicated that we believe it's going to take up to 5 years to achieve these synergies. On everything else that we have started, where the baseline was in 2017 or potentially 2018, I mean these improvements are, of course, ongoing. So it's going to be a little bit depending on which part of the portfolio that we are talking about here. And -- but let's not forget about that all the acquisitions except Igloo are contributing with a margin above Dometic average. So already there, we are, in a way, improving our situation from there. But in terms of Igloo, you should think about it starts now. Concerning the rest of the initiatives that we are running, I mean we are already -- we have already achieved certain things. So if we assume that 2019 was some, kind of, a starting point with the new strategy, then we are 2, 3 years into that plan.

Sure. And then the second one is this conflict that has been discussed, that you say that Service and Aftermarket is your highest margin business. And at the same time, you are pushing heavily into stand-alone products, into consumer products, and they don't have any Service and Aftermarket...

Why do you say so? So you buy from me CFX 3. What will you do when you have a problem?

Yes, that I might try to fix there. So -- but yes, okay, let's say lower priced items. So the -- and then the -- at the same time, we talk about divestments in the OEM business, in the lowest margin OEM business, which is also sort of feeding into the Service and Aftermarket.

Now that depends. That's why it's so important to understand that. If you take to have one product, a cooktop in an RV, people are normally using the cooktop to heat up water for the breakfast. And then they're using a barbecue outside to do the dinner. So that means that whenever we are selling a cooktop to that industry is one sale, it's one transaction. You have high margins, perfect. You have low margins, so I think that's the kind of evolution that we need to have. So don't be convinced that there is a direct connection between OEM and aftermarket. A perfect example you have in Valterra, Valterra has no OEM whatsoever, but there is still a $150 million company service.

So instead of looking like at RV OEM, we should looking into the RV OEM?

Correct.

So maybe food and beverage has lower aftersales climate?

A Fridge, how often do you change your fridge at home, 10 years? And then you're using the fridge every day, right? How often do you think that they are using the fridge in an RV? The average RV-er is using the RV 20 days a year. So basically, the fridge is going to be there for 30 years or 40 years.

So in food and beverage, there's hardly any service and aftermarket.

There is some but not a lot.

Okay. Thank you. I think we need to stop the Q&A there just to respect everyone's time. Sorry about that. Thank you, Stefan. Thank you, Juan, very much. And before your final conclusion, Juan, just a few reminders from my side. There will be an on-demand version of this presentation on our web tomorrow. Secondly, we will send you an e-mail with this very, very short survey of today's event, so please take 1 minute on completing that one, that will be much appreciated. And then thirdly, please feel free to stay also afterwards and check out the products. Thank you.

And don't forget to buy them. We need to pay for the event. So summarizing the day. Well, first of all, thank you very much for your attention. It's great to meet people again after 2 years of internal meetings and teams. And that's valid for you, I guess, but it's equally valid for us. Human beings, we still have body language. And again, I guess that it is good for us to meet you and equally for your side. So how do we summarize the day? I mean, first of all, we have a clear strategy. We have a solid strategy that we believe in, that we are passionate about and that we are implementing. And the good news is that we have a very, very strong feeling. We see that in our results, in our underlying results, we are moving. As a company, we are marching. Secondly, outdoor. We are introducing to the market a new category of products. As Henrik mentioned, you will find cooler companies, you will find tent companies, but you will not find a new category of products fit in as well as we are putting together. It takes a while, as usual, when you are penetrating a new market, but we are fully convinced that this is going to pay off. And our meetings with retailers, our meetings with consumers is telling us that clearly. Thirdly, we intend to accelerate the reposition of the company both through acquisitions but also through divestments. We want to move this company to a growth business and a higher-margin business than we have today. From a product development perspective, innovation has been keen. We have made a step change, but there is more to do, and we will continue to invest in our products. Products are the main driver for organic growth. Let's keep that in mind. Sustainability is becoming an integrated area of our company. Mobile living is about enjoying nature, and we are part of that through our products. We will continue to offer to the market more innovation, more durable and more sustainable products. Then we have cost reductions. 2 years ago, we were talking about the need of Dometic to be industrialized. Well, we cannot say that we are 100%. We're still a long way to go. But I do believe as well that we have made a major, major change in the structure of the company. We are becoming a global company. We are acting as a global company. I'm extremely happy that we have today segment managers, segment heads that are very much part of creating this company. And then last but not least, we are fully committed to our financial targets. It has been at our journey in the last couple of years underlying, we have progress in every single area of the company. And we as management, we are fully committed to deliver those targets. And with that said, thank you very much. Have a great evening, and talk to you soon. Thank you.