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

Welcome to Dometic Q2 report 2026. Today, I am pleased to present CEO, Juan Vargues; CFO, Per Carlsson; and Head of Investor Relations, Tobias Norrby. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Hello. Good morning, everybody, and welcome to the presentation and interim report for the second quarter 2026. Let's move into the highlights. As most of you are aware of, the market conditions are still tough. Uncertainty is still there. We have seen, as a consequence of the situation in Middle East, high raw material -- higher raw material prices that might be leading to inflation in the coming months. At the same time, the tariff volatility is still there. On one side, the American administration took away a number of tariffs, but implemented some new tariffs as well, the so-called 232 tariffs. We see consumers still being cautious in the same way as our customers in the value chain, meaning OEMs and dealers and wholesalers. And we have seen as well, as a consequence of what I commented before, a situation where industry production, especially in the U.S., is coming down but also in Australia as a consequence of higher interest rates implemented during Q2. And we see also kind of a slowdown -- starting to see kind of a slowdown in Europe as well. Looking at our performance, we delivered a negative organic growth of 1% with a positive single-digit growth in service and aftermarket according to our strategy. We are happy to see as well that distribution is coming on par with last year, and we see a decline in OEM for the reasons commented before. EBITA margin coming in at 12.4% versus 14% last year. And the margin reduction is primarily driven by the increased raw material and freight cost. We see also increased SG&A, partly due to a bad debt provision for the Chapter 11 filed by West Marine in the U.S., affecting primarily marine, but also our Mobile Cooling Solutions segment. And then we continue to invest in product development and marketing following, obviously, all the product launches that we have done and the ones that we have on the pipeline. We also have had a tariff refund, which is offsetting a part of the tariff cost that we have -- additional tariff costs that we have in the quarter. Free cash flow, over SEK 800 million in comparison to SEK 1.3 billion last year, leading to a leverage of 3.3x, which is on par with previous year, but also Q4 2025. Considering the market situation, especially in the U.S., where we see the RV industry coming down additionally just when looking at the last 3 months that we have information from the American Association. Manufacturing is down 16%. We will see how the numbers look in June, but we don't expect any improvement in comparison to what we have seen so far. We also decided to extend the global restructuring program. As you all know, we were expecting growth in 2026. The growth is going to be tough to achieve and that means as well that we continue to adapt our cost to the new circumstances. In this case, we have done -- in the main program, we have done a lot, which is impacting our gross margins, meaning consolidating factories, consolidating distribution centers, some SG&A. In this extension of the program, we will focus more on the SG&A part of the business, especially, again, in the land vehicle segment, where we see the delay in the recovery of the market. The expected savings are going to achieve SEK 150 million when we are totally done by mid-2027. And we are booking restructuring cost of SEK 100 million which is recorded as items affecting comparability. And of course, depending a little bit on the market situation and how the market evolves over time, we will continue to consider additional measures. Looking more at the hard numbers, sales, close to SEK 6 billion with 1% organic decline. We also had 1% due to discontinued businesses. EBITA, SEK 739 million reaching a 12.4% EBITA margin in comparison with 14% that we achieved last year. Adjusted EPS of SEK 1.27 and a free cash flow of a little bit over SEK 800 million in comparison to SEK 1.3 billion. Two main reasons for that. The main reason is really high inventories in the quarter as a continuation of the high inventories that we had also in Q1. In this case, on top of the inventory that we built up on the expectation of having a much better year 2026. And remember that we are in Q2, which is a stronger quarter and then we have Q3, which is also a strong quarter. But on top of that, we are also moving a couple of factories. We are shutting down a couple of factories as a consequence of the restructuring program that we are running. And in order to prevent problems, delivery problems during the move, we are also building extra inventories just to make -- to be on the safe side. And again, leverage ending up 3.3x. Looking at the first half of the year, SEK 11.2 billion in total revenue or the same organic decline of 1% and the same also 1% in negative portfolio changes. EBITA close to SEK 1.3 billion or 11.6% as EBITA margin in comparison to 12.3%. Adjusted EPS of SEK 2.14 slightly below last year's numbers and a free cash flow of SEK 615 million, reaching the same leverage as we had 1 year ago. Looking at the breakdown of sales. Again, 1% down with land vehicles 4% affecting primarily Americas, negative 16% for the reasons that we already commented. APAC is also down 12%. We saw a much better Q1. We saw a deterioration in Q2 rapidly. After the interest rate increases the industry really pulled the brake again, while EMEA shows positive growth of 3%. Happy to see the Marine continues to show organic growth, 3% as a continuation of 2% that we saw in Q1. And even Mobile Cooling came in at plus 5% in comparison to the plus 1% that we were showing in Q1. While Global Ventures down 16% and in comparison to minus 7% in Q1. And I will come back to those numbers later. Looking at the breakdown of sales by channel. No major changes in reality, service and aftermarket becoming 31% of the total group, while distribution is coming down to 31% for 33% that we were showing last year. And this will change depending on the quarters. We have service and aftermarket and distribution being very, very strong in Q2 and Q3 and then coming down in Q4 and Q1, while the OEM business is a little bit more stable during the year. Looking at the different channels. Again, happy to see the second quarter of growth in service and aftermarket, distribution coming at the same level, and we have seen also in the last 2 quarters quite a bit of stability. And then the OEM for the duration driven very much by North America and Australia. Just as a comparison, looking at some of the market indicators, we see the RV manufacturing in the U.S. coming down and see an acceleration in Q2 in comparison to Q1. We see registrations in Europe being very, very strong during the first half, partly driven, especially in February by the new model series, but then coming down in April, May a little bit better in June. So it's going to be super interesting to see what happens now in Q3, whether we see stability in Europe. And I can say meeting customers across Europe in the last couple of weeks that you have a mixed bag. We see some of the customers being optimistic about the second half, while some of the OEM customers, especially being more cautious about the second half. We also see that the U.S. registrations are down in the U.S. We don't have, unfortunately, the same quality data for Europe. In Europe, we see that we are still growing quite nicely in the European side, while the OEM in the U.S. is still negative. Looking at EBITA evolution over time, 12.4%, as I commented before, versus 14%. Gross margins continued to improve, 30.1% versus 29.7% 1 year ago. We have obviously a positive channel mix, with service and aftermarket growing while OEM is coming down. But we also have the savings performed or delivered by the restructuring program. At the same time, moving in the opposite direction, we have raw material cost and freight kicking in. And not the least driven very much by the new oil prices, but we also see metals, aluminum coming up quite significantly. We see steel starting to point upwards as well. And then we also have tariffs refund in the quarter, which is having a positive impact. But all in all, still we see positive impact very much driven by the channel and the restructuring program. SG&A, on the contrary was negative, came in with 10% increase versus last year. Half of that is bad debt provision for West Marine that as most of you are aware of, filed for Chapter 11 2 months ago. In that case, we are taking, obviously, a cautious approach. We are booking the entire risk, while obviously, we are still negotiating and expecting to get some of that money back at the same time, as we continue to invest in product development and marketing. Moving to the segments. Land vehicles down 4%. Again, Europe positive, while both Americas and APAC is negative. We see a slight decline in service and aftermarket and a continued decline in the RV OEM side. Looking at EBITA, SEK 246 million or 10.3%, reduced profitability very much due to the lower sales. We see also raw material costs kicking in -- higher raw material costs kicking in. And we have a flat development on SG&A despite the fact that we are still investing in product development and marketing. Marine positive. We are happy to see continuous growth with very positive service and aftermarket driving margins for the Marine business. While a slight decline in OEM driven by North America, while again, Europe is pretty positive still today. I had commented a couple of times that the market -- the boating market in the U.S. and marine are slightly different. In Europe, you have more sailing boats, but you also have the yachts. And on the yachts, we have a lot of equipment. And normally, order books are much, much longer than what we see in North America. So good evolution in other words. EBITA margin coming in at 18.8% versus 19.6% last year despite the bad debt provision for West Marine. We have higher SG&A. We continue to invest in product development, not the least on the Gyro program that we are expanding at the same time as we are launching new products, and therefore, continue to invest in marketing as well. EBITA, as I commented, improved underlying if we exclude a bad debt provision. Mobile Cooling. Organic growth, 5%. We see a very solid growth in North America. We see as well a good order intake. So the season is developing in a positive way, which we are very happy about. EBITA margin though down to 11.5% as a consequence of significantly higher resin prices that came just after the breakout of the war in the Middle East. And of course, we are increasing prices, but it takes a while before we see an effect. We started to see the effect in June and our expectation is, obviously, that we will see these margins coming up again during Q3 and Q4. We also see in this case that we continue to invest in product development. And even the filing of Chapter 11 for West Marine did have also a negative impact on our margins in the SG&A line. Global Ventures. 16% down, driven partly by mobile power solutions, which is very much connected to the RV industry, but also by residential in the U.S. where we have seen also our public competitors coming in with pretty negative numbers. So we had a pretty strong 2025. We are comparing with pretty strong numbers 1 year ago, but now it's turning negative instead. EBITA margin, 9.3%. And of course, in this case, we are talking about the small organizations. So it's a little bit more difficult to adapt cost, so it's very much driven by the lower volumes and higher SG&A as a percentage of sales. We will continue to put a lot of emphasis on sustainability and innovation as part of the sustainability as well. Injuries still kept at a very good level and well below our targets of 1. We see share of female managers at the same level as we have on the target. Renewable energy, we'll continue to invest. We are up to 44%. We were 43% at the end of Q1. Innovation Index at the same as Q1. As you may remember, we have a target of 25%, and we will work hard to achieve that also at the end of this year. And then we have also the share of high-spend assessments on suppliers of 63%. We are coming from 53% in Q1. So even there, we see improvements in comparison to where we are coming from. Looking at some of the exciting products that we are launching. And before that, we have been commenting this is the second quarter in a row commenting that we are investing in our product launches. We run a major campaign building up with the target of building up even more the brand awareness for Dometic, especially on the outdoor industry in Americas, and we have got a lot of good feedback after that, and we will continue to invest in the same manner moving forward as well. Looking at innovation, again, we continue to invest in our portable products, in this case, the reel program. We are seeing good growth with this program, and we see also very nice margins. Again, coming back to the outdoor industry. We have the introduction of our new bed slide to facilitate how to use our mobile cooling and packaging solutions. Moving into the more of the RV industry, we are launching our new electric water heater, which is delivering a number of benefits in comparison to the models that we are replacing at this point. And this is specifically for North American market. A lot of good new product launches in the pipeline. Moving from products to the restructuring program. Again, we extended with SEK 150 million in savings, so we will generate total SEK 900 million at the end of -- sorry, mid-2027 and SEK 750 million by the end of this year. So far, we have closed one manufacturing site and we have a couple of them in the pipeline to be closed before year-end and 6 distribution centers. About 400 employees have been impacted so far. We ended up Q1 with savings running rates of SEK 400 million. We are extending out to SEK 490 million at the end of this quarter. So progressing according to our expectations. We had cash out in the quarter of SEK 84 million, which brings the total amount to SEK 339 million since the program started in Q1 2025. And then as I commented already, 1% in discontinued businesses was affecting both Q2 as well as year-to-date. And with that said, I would like to hand it over to Per.

All right. Thank you. Hello, everybody. I will walk you through the financials then. So P&L-wise, top line close to flat versus last year where we had the sales in the service and aftermarket offsetting the decline in OEM, which is also then helping us on the gross margin as it is a positive margin mix for us. Gross margin up 0.4%, which is burdened by some couple of significant headwinds, including the raw material prices on the resin side and also on the metals, hitting the Mobile Cooling and to some extent, also the Marine segment. We also have significant tariff costs introduced in Q2 of last year, which did not fully impact us last year, but it's a full effect this year, obviously. Offsetting that is the positive savings that we have from the restructuring program, together with the price increases and then also the tariff refund that we booked in Q2 which is, to a large extent for the quarter, offsetting the tariff cost. Coming down to the operating expenses. As Juan talked about, we have the bad debt provision related to West Marine filing for Chapter 11 of some SEK 50-plus million and then we also have an increase in product development taking -- increasing then the SG&A compared to last year. EBITA before IAC SEK 739 million versus last year in running currency of SEK 877 million and a decline on the operating margin of 1.6%. Of course, we're not happy with the decline in the result. But at the same time, a solid result, I would say, considering the environment with headwinds, both in the market demand and on the cost side. We recorded the SEK 100 million in items affecting comparability for the extension of the 2024 restructuring program. Looking at the finance net, it's down favorably. So we have a lower debt, lower interest expenses and then also a positive effect in -- on FX on our financial assets compared to last year. Cash flow SEK 1.083 billion in operating cash flow, negatively impacted by the lower release of inventory or cash from inventory. We have a decline in -- we have a favorable impact on the inventory side in the quarter, but not to the same extent as last year. And this is due to a buildup relating related to the restructuring program, where we have moved on the manufacturing primarily within the U.S. of some $20 million plus. We also have had lower sales increase or flat sales versus an expectation of an increase in the quarter, which have resulted in a little bit of an inventory buildup. And then I think it's also worth mentioning that last year in Q2, we had a significant inventory reduction in Mobile Cooling due to production issues. So free cash flow is favorably impacted by lower interest paid, partly due to the lower interest cost, but also due to timing of the interest payments actually. Looking at the financing, we repaid a SEK 2 billion bond in Q2 in April, actually, to reduce our debt. AR program is running, has no real significant impact net on the AR in the quarter. As we ended the quarter, we started quite strong sales increasing our receivables. Okay, what's the next. So little bit of the trend chart here on the free cash flow. And as you see and as you're probably aware of, Q2 and also Q3 are important cash flow quarters for us. We have a negative kind of trend here, which I would say is partly impacted by the lower sales than over the period tying up less working capital. Now we are leveling out on the sales development, which is, of course, positive, but we continue to focus now on being efficient on our working capital, which takes us to the next slide then where we see the overview of the working capital. And we are down in inventory days versus last year. You see a little bit of an uptick there in Q2 which I just explained. However, then partly offset then by the increase in payables related to the higher purchases. We are at 25%. So that's a decline versus last year -- an improvement versus last year and flat versus Q1. Inventory is obviously a focus for us, which is the largest part of our working capital with SEK 5.1 billion. So that is a significant number and the number of days, 125, would also hopefully indicate that there is some potential for coming down going forward. And again, accounts receivable, slightly down versus last year, but close to flat. Also related to cash flow, obviously, is the CapEx level. We are flat, I would say, slight decline in terms of investments into fixed assets. We are running a relatively low CapEx, I would say, in the company due to our asset-light supply chain. It's not a big burden for us cash flow-wise. R&D, as we talked about, is slightly up and actually significantly higher than our investments into fixed assets. Moving over to the debt side of the balance sheet. Leverage is a little bit down versus Q1 down to 3.3x versus 3.4x and on par with Q2 in 2025. And we have actually a reduction of debt or net debt, if you compare to last year of SEK 1.2 billion. So we continue to work hard on our balance sheet. And this is obviously a focus area together with the working capital. And versus 2024, we are down SEK 2.8 billion in net debt. So that's a good improvement for us, but we don't fully see that obviously in the leverage ratio. Right. Next. So looking at the detail of our outstanding debt. We have a good maturity profile, I would say. The net debt of SEK 9.3 billion sitting on the cash at the end of June of SEK 3.6 billion. And we do plan to use some of that to pay back SEK 750 million CF bond here in Q3. We did pay back, as I mentioned, EUR 200 million euro bond in Q4. Average maturity 2.7 years. And on top of this, we have obviously done the RCF of EUR 300 million. Yes. I think that was the conclusion of the finance side. So I'll leave it back to you, Juan.

Thank you, Per. So summarizing Q2. We delivered a solid quarter, considering obviously the very challenging market conditions where we see lower volumes in a major part of the business considering the American market, considering APAC as well. We see as well raw material prices starting to kick in, having a major effect, especially in Mobile Cooling, but also on the other segments. We see consumer confidence still at pretty low levels and unfortunately, discussions about higher interest rates instead of decreasing interest rates. We delivered, as I said, an organic decline of 1%, which we believe is good if you consider what we see around us. We are happy to see that we have a positive mix with service and aftermarket, which is a critical part of our strategy, growing. Even distribution looking better during the last 2 quarters. We see growth in Marine and Mobile Cooling for 2 quarters in a row. And we see even when looking at the Land Vehicles, Europe growing while the other 2 are down. Backlog at the same level as last year. So the starting point for the quarter is in line with last year, which is positive as well. Leverage still under control, high but under control, and we keep working to improve cash flow and to keep fighting our debt, our existing debt, considering as well that we have reduced about 1/3 during the last 4 years, the net debt that we had after the pandemic. And then it's clear that we are a little bit more cautious, especially looking at American markets. And we put all attention to what we can influence, meaning growth in service and aftermarket, meaning the full implementation of the restructuring program. Adapting pricing, obviously, to the new situation with raw material prices and freight costs kicking in at the same time, as we continue to invest in product innovation and marketing, supporting, again, our future growth. Strategically, as a consequence, innovation index of 24%. We are working hard to reach our target of 25% by the end of the year and then added another SEK 150 million in savings to the existing restructuring program, adding up to SEK 900 million total savings by the end of -- sorry, by the mid of 2027. By the end of this year, we will be at SEK 750 million. And with that said, I would like to open for the Q&A session.

[Operator Instructions] The next question comes from Daniel Schmidt from Danske Bank.

A couple of questions from me then. Just trying to reconcile your top line statements and I clearly hear you in terms of sort of consumer confidence and high interest rates and all that. But still, you're only at minus 1% organically for the first half this year and you did say the growth will be hard to achieve in 2026. But at the same time, you do write that price adjustments have started to take effect and that order intake improved in June and that order book is on par with last year. Are you seeing a very volatile market during the summer? Is it harder to judge than it usually -- than it has been historically, or is this sort of a rather than -- rather safe than sorry statement? Or is the order intake back down again in July?

No, I think it's uncertain. There's a combination of the different things. So we saw April okay-ish, May was weak and June came in pretty strongly. So it's difficult to judge. We see -- as I said, I see some kind of stability in Europe. I see kind of stability on the Marine side, but I see deterioration in the U.S. RV industry, and I see deterioration on the Australian RV industry as well. Keep in mind that Australia just increased interest rates twice during the second quarter. So I would like to be much more clear than I am today, but it's simply too uncertain to say we are going to grow. I believe, obviously, that you have a difference between volume and top line in krona and ore. I believe, obviously, that volume-wise -- with the feeling I have just now, volume-wise, we are not going to achieve the targets that we have for the year. At the same time, we have also price increases that will help organic growth from that perspective.

And are you realizing those price increases fully now? Or is there still more to come during Q3?

No, no. We saw -- the first improvement we saw in June. I mean, keep in mind that, first of all, it's difficult to increase our prices when the prices are so volatile. So you need to wait for a couple of weeks to see are the markets -- are the prices stable or not. One of the most difficult to stop is really resin prices. Resin prices are immediately impacted by oil prices. And it is 1 month, we get monthly updates on prices from our suppliers. And we are talking about major suppliers. Then of course, we increase prices, but it takes a while before you send the price list because you want to see some stability and then, of course, your customers are pushing back. So we started to see a clear improvement on the margins in June, we will see improvements in the coming months, clearly. But you have a time lag in cost increases and price increases.

Okay. And then the second question on Marine where you did take the bad debt provision, most of it, was my sort of understanding at least, maybe some of it ended up in Mobile Cooling as well. But given what you write in the report, that's around SEK 52 million. If you add that back, it looks like the Marine margin is 23% for the quarter. That's up 3.4 percentage points compared to last year. Is there a positive impact on tariff refunds in Marine as well? Or is this such a big jump?

Yes, there is, but there is also an impact -- a negative impact on additional tariffs. So you have tariff refund and you have new tariffs. You have the 232 that was implemented in April as well, kicking on the other side. So you have a positive effect is that you have a very positive service and aftermarket. And of course, we are -- we continue to work on traditional costs.

And how big was the tariff refund for the group in Q2?

I will not tell you. We are negotiating with customers and suppliers. That would not be super positive if we were commenting how much, as you may understand.

And just maybe just last one. You clearly state that you needed safety stock when it came to sort of restructuring that you were doing in Q2, around USD 20 million was probably the impact on inventory. Is that going to be released again in the second half of this year? Or is that going to follow us into '27?

I think we will see some improvement in Q3, but the major improvement should be coming in Q4 because we intend to close a couple of sites during the fall.

The next question comes from Agnieszka Vilela from Nordea.

A couple of questions from me. Maybe a follow-up on Daniel's question on the bad debt provision. Could you please help us and quantify the split between those in Marine and Mobile Cooling? How much have you included in the results there?

About 90% -- about 85% to 90% is Marine, 10% to 15% is Mobile Cooling.

All right. Great. And then just looking at the profitability of the Marine then approaching 23% or at about 22%. How confident are you that you can kind of stick at above 20% level in the coming quarters if we see, say, single-digit organic growth that you achieved in the quarter?

I feel confident and -- provided that we have -- again, we continue to run a plus 2%, plus 3%, plus 4%, we are going to see margins over 20%.

Perfect. And then also, Juan, maybe...

Just one more comment, which is also following Daniel's question. I mean keep in mind that these tariffs are killing when they are moving back and forth, back and forth. It is not easy to get back to customers. So some of the margin deterioration you have been in Marine is not just lower volumes. It takes a while before you get the clarity on how much is impacting every single product, calculating how much of increased prices and it's not just about customers will raise questions. Please explain to me. And then you need to break down. So just now we have steel and aluminum from Canada obviously impacted by the new tariffs. So it takes a while before you get the price increases simply because it takes time to calculate. So I feel pretty confident that we will be above 20% provided that we have positive organic growth. So some positive organic growth.

Yes. Yes. Understood. And maybe I understand you don't want to kind of disclose how much tariff refunds did you get. But can you just tell us how does it work really? Like do you provision for that for your receivables? Have you received those money for the tariffs back already? Or how does it work really? And also like what should we expect for the gross and net tariffs, so to say, in the coming quarters?

We apply for it. There is a Phase 1, 2 and we have applied Phase 1 and 2 because they are open. Phase 3 is not yet open. And for the ones we have applied, we have received already a significant part of what we applied for. So it's coming in.

Yes. And tariffs on a gross level going forward, like the levels compared to what you paid already in the previous quarters?

Yes, it's very difficult to predict. But I would say, currently, it's running on the -- we see a constant level on -- versus our imports as a percentage of imports, so it fluctuates with the quarters but...

All right. And the last one from me really to Juan. You say in your comment in the report that you did see some encouraging signs late in the quarter. Just tell us what they were and kind of what markets and also maybe refer to what you're doing yourselves?

I mean it's very much about order intake and the order stock. So as I commented earlier, we saw April being okay-ish, not in line with last year but not far away. Then May was pretty weak. Then of course, you have 2 working days less in May this year than last year. But then June came very strongly both sales-wise and order intake-wise. And it was a little bit all over. We see, again, the RV industry in the U.S., tough. We see the RV industry in Australia specifically tough. But we see Europe still holding up pretty well, even if registrations in Europe have been negative in the second quarter. When meeting customers, and I have been meeting lots of customers myself during Q2 both in the U.S. and in Europe, the Europeans is a mixed bag. I would say that some of the customers I'm meeting are still positive, optimistic about the second half, while some of the other customers, I would say, perhaps be more specifically German customers are a little bit more cautious about the second half.

The next question comes from Fredrik Ivarsson from ABG Sundal Collier.

First, sorry to come back to the raw mats. But when we think about the split or the bridge for Q3, what kind of headwind do you envision as you look into this quarter? Do you expect this to be worse than what you saw in Q2? And also, do you think you can offset the full piece through price increases? Or will we have a sort of net negative impact?

Well, I think on the raw materials side, we will continue to see headwind going into Q3. I mean everyone can follow the index, and we see some positive indications in terms of index. But of course, then you have the whole inventory impact where we have made purchases in Q2 that will roll into Q3. We have implemented price increases, which have started to take effect. However, giving a number here on whether it will offset or not, it's hard to do. I think we will actually have a bit more headwind in Q3 than in Q2 when it comes to the raw material P&L impact.

Yes, makes sense. And then on the price increases, do you think it is having impact on demand or are customers sort of absorbing the full increase?

Customers, I mean I can -- nobody gets happy, right, when you get price increases. Customers react. At the same time, where is alternative. So of course, the concern is what will be the impact on the consumer, not on the OEMs or the dealers. I think the major question here is, again, the consumer.

Yes. And then on Mobile Cooling, some price adjustments here as well, of course. And you said you saw some positive impact from those in June. And my understanding is that you expect the margin to expand in H2. First, can you confirm that my assessment is correct?

That's right. So I mean we are talking about resin prices. Resin is the prime raw material that we have in the Mobile Cooling business. And resin prices, you have a number of major suppliers, and they are adopting the prices on monthly basis. So basically, when the war broke out in -- at the end of February -- at the end of March, we got massive price increases. They continued in April and May. And of course, it takes a while, and I mean a while, before you can send first the price list to your customers because you need to have some kind of stability. You cannot have negotiations every week with the major customers. And then it takes a while before they implement it. They also have a notice period. So that's why we started to see the price kicking in, in June and those price increases will continue during the second half. So we expect to see a better position in the rest of the year than we have seen in Q2 in comparison to last year, of course.

Yes. And maybe if I could sneak in one last on the inventory buildup related to the factory consolidation. You said more than USD 200 million. When do you expect this excess inventory to be sort of cleaned out?

No, we said SEK 20 million.

Sorry, yes, of course. My bad, SEK 20 million. When do you expect those to be sort of cleaned out of the system?

It will be -- we will start to see something at the end of Q4, meaning that Q4, Q1, we should see that happening.

The next question comes from Igor Tubic from DNB Carnegie.