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Good morning, and welcome to the Dometic Q4 Report 2020. [Operator Instructions] Today, I'm pleased to present Juan Vargues, the CEO. Sir, please go ahead.
Thank you very much. So good morning, everybody, and welcome to the presentation of the interim report for the full quarter and the full year 2020. As usual, I have Stefan Fristedt, our CFO, with me. And without any further delay, I would suggest that we move over to the presentation.So the fourth quarter 2020. Well, I'm happy to present, what we consider to be, a strong performance for the quarter. We see strong market conditions and low inventory levels in the marketplace. We saw a strong development in Americas, growing market demand in EMEA and a very nice recovery in Asia Pacific after lockdowns back in September and October.We continue to see difficulties to get access to certain components, and we have also experienced that freight capacity has been challenging for us, as for many other industries. So this is not an RV or Marine industry problem. It's a general industrial problem. We see Volvo. We see Electrolux. We see many other companies having exactly -- facing the same kind of difficulties.When looking at performance, we are very pleased what we deliver during the quarter, 15% organic growth. And I would like especially to mention aftermarket showing plus 22% after a very strong Q3, showing 13% organic growth. Our order backlog has been increasing stepwise and is considerably higher than what we had when we entered 2020, 1 year ago. We also see clear performance improvements in our supply chain. So just now, our factories are running at full capacity internally, but again, facing delivery problems from the supply chain.Organic sales growth and profitability improvements in all the regions, which is obviously very pleasing. Strong EBIT margin improvement showing 11.1% versus 7.6% 1 year ago. We're also happy to report that Innovation Index continues to increase. We ended up the year at 22% versus 16% last year. And we introduced a number of new products to the market. Last but not least, we continue to work on our cost reduction programs.If we move over to the full year, on the market. Obviously, when looking at the year, the year has been unprecedented, showing a very, very weak first half, very much impacted by COVID all over the world, while we have seen as well a strong recovery during the second half. We -- obviously COVID also led to a positive impact due to the fact that [indiscernible] as a trend strengthened additionally during the year. And again, we enter in 2021 in a situation where retailers are showing much lower inventory levels where we feel, obviously, that the market demand is going to be pretty strong in the coming quarters.Performance-wise for the year is clear that we are impacted by the first half. Organic sales growth was down 11% -- 10%, sorry, with a weak first half, 27%. And if you may remember, we were down 38% in the second quarter. While the second half has been positive and about 8%, of which the fourth quarter stands for 15%. Even here, we consider that showing a 10% organic growth drop, at the same time, as we are delivering an EBIT of 12% is a very strong performance under current circumstances.The year has been tough to manage. It has been very much about balancing the short-term cost reductions during the second quarter, at the same time as building up capacity for the quarters to come, and at the same time as we're investing long term. So if you look in the product area, we have been investing in the entire year. If we look at our sales organizations, we are building up the sales organizations for new segments. So again, we are pretty happy what we achieved during the year.Cash flow continues to develop very positive. We showed a solid cash flow during the year. And I'm also happy to report, obviously, the leverage ended up at twice, which is also in line with our financial targets. And the Board of Directors proposes, thereby, a dividend of SEK 2.30 per share.If we move over to the financial summary for Q4. As already mentioned, 15% organic growth, negative impact by currencies of 7%, a strong EBIT improvement and up SEK 466 million or 56% up. And we see improvements in all the regions as we are going to see in a couple of minutes from now. EBITDA, up 33%; cash flow, lower in the year on the operating side; leverage, meeting our financial targets; and EPS, negative of SEK 0.54, impacted by the tax provision that we are going to discuss later on. Stefan is going to bring it up.When excluding the tax impact, EPS in the quarter ended up at SEK 0.87 to be compared with SEK 0.16, 1 year ago.Looking at the sales growth, of course, is very pleasing to see that after 7 consecutive negative quarters, we turned to the positive in Q3, and we see a very clear improvement in Q4. And we expect to continue to see improvements moving forward. Americas, 22% up organically; EMEA, 7% up organically; APAC, 9% organically. As I mentioned previously, aftermarket, 22% after a strong Q3, ending up at plus 13%.Looking at EBIT margin improvements. We see also the positive trends, strong Q4. Impacted, obviously, by the volume. A strong mix towards aftermarket. We see also improvements on the tariff situation. As you know, we built up a factory in Mexico. We have been moving volumes stepwise from China to Mexico, and that's what we see now in the numbers. We are about 50% done in Mexico. We still have 50%, and it's going to take some time since we are talking about many different products. So that's why it takes a while.On the -- we continue to work on the cost savings. And even the combination of cost savings over the company at the same time as we are launching new products that are more cost-efficient is also generating a good improvement in our margins. On the negative side, we have FX, which is playing against us, clearly; and then the freight cost that I'm sure you have read in the media, everybody is impacted. We're looking at entire year, 10% organic growth down, and a negative FX impact of 2%. EBIT ended up at 12% versus 13.2%, 1 year ago. And of course, the year has been very much impacted by the situation on the COVID. While we have seen underlying efficiency improvements and pricing across the company, and we continue to see also a positive mix aftermarket more towards aftermarket than OEM. EBITDA down 17% by the same reasons. And a negative cash flow impacted, obviously, by the lower EBITDA and the tax issue.If we move over. Perhaps to mention, obviously, that we have a very, very nice drop to leverage on our growth during the last 2 quarters, we want to mention. If we move over to the application areas. As you can see, we are [indiscernible] areas are showing 12 months old in trends. So we are going to see, obviously, a stable wise improvement during the coming quarters.Moving more in detail into Americas. An organic growth of 22%, strong growth in all applications and order backlog at all-time high. That's valid for all the segments, I would say. Extremely strong development in the aftermarket, even there in all the segments. And we are happy to see that we are starting to see how the automotive OEM contracts that we were awarded a couple of years ago are starting to kick in. And we saw a very nice improvement in Q4 as a continuation of Q3. EBIT, up 78%, with an EBIT margin ended up at 11.4%, which is considerably higher than what we saw 1 year ago. And I will not repeat myself. It is more the same. It's very much about mix. It's very much about lower tariffs and efficiency improvements across the line.On the negative side, we still suffer, obviously, of events due to COVID, where we have outbreaks in the factories that are contained, but still. When you have cases, you need to isolate the area, you need to disinfect the area and send people on quarantine. Having said that, we are extremely happy to report that we are very much in control of the situation in terms of COVID, and I'm very happy about how the entire organization has reacted on these events.As I mentioned as well, freight cost and FX is playing just now against us. On the full year margin, 10.4% in comparison to 11.8% last year.Moving over to EMEA. We see as well a strong growth in all applications. We saw that OEM is coming back in both RV and CPV after a negative first half. Some improvements in Q3, but then really coming back in Q4. Still, I guess, that you are going to see -- yes, but the numbers of the German Association are showing fantastic growth. Well, that's totally true. But if you are following the difference between registrations and production, I'm sure that you have observed that registrations are up 36%, while production in 2020 went down 7%. So there is a gap between registrations and production.When looking at Marine. We had a negative evolution in the quarter in the OEM side, even if we start to hear positive tones from the boat builders, both the Italian and the French Veneto. And aftermarket on the contrary developed very, very strongly. EBIT up 43%, showing an EBIT margin of 5.7% versus 4.1% last year as a consequence of the sales growth, the underlying efficiency improvements and pricing. And in the same way, as in Americas, we're still suffering from outbreaks in our factories from time to time. And I have to say, this is not just our factories, it's also our suppliers' -- supply chain all over. And in the same situation, freight cost and FX are playing against us in the same way.EBIT margin for the year, 11.9% versus 13.1% last year, impacted by especially Q2. If we move over to APAC, another area where I'm very, very happy about, 9% organic, with very good growth in all application areas, double digit -- high double-digit growth in Asia and good growth in Pacific after lockdowns in Q3 and beginning of Q4. And we see a return of the OEM business, especially the RV side is coming very, very strongly in the quarter. EBIT, 31% up, with an EBIT margin of 25.9% compared to 20.7% last year, the same. We get a very good leverage on our growth. We see efficiency improvements. And we have, on the contrary, as in other regions, a negative impact to OEM aftermarket and a negative impact geographically since we have higher margins in Pacific than we have in Asia. And even here, we are suffering from the FX -- negative FX influence. Full year, ending up almost at the same EBIT margin as 1 year ago, 21% versus 21.2% despite the volume drop.If we look at the strategy, we continue to deliver on our strategy, a strategy that we implemented -- started to implement and communicated internally in our organization in October 2018. We see how aftermarket is starting to show very clear improvements. We also feel very positive market conditions among our customers, both on the OEM side and on the aftermarket side. We see how the backlog continues to strengthen, which is very positive. That gives us a very positive feeling about 2021. And we continue to work as well on our channels, on implementation of B2C e-commerce, where we are going to go live with a totally new platform -- a new software platform during this quarter, Q1 this year. And as I mentioned previously, we have done a lot to build up our sales organizations during 2020, and we have great expectations on the results moving forward.On the pro leadership. I mentioned previously, 22% for the quarter versus 16% for last quarter last year. A number of products that have been launched, and I will come back to that, is even more positive is that we have a very strong pipeline or new product launches during the entire 2021. On the cost reductions, we continue to work on our SKU. We ended up the year at minus 48% versus the baseline, 2018. And if we compared all the SKUs that we looked at, at the time, we end up at minus 55%. So very, very good improvements in reducing complexity.We announced during the last quarter that we started the implementation of a new organizational structure in EMEA, where we are going to move more from country legal entities into regional hubs, where we can expect that we are going to generate quite a nice saving that we are going to invest in strengthening our sales organizations in front of the customer. And then we continue to be committed to the cost reduction target that we announced. Of course, the situation with COVID and the fact that we have travel restrictions, practically all over the world is in combination with the strong demand, are delaying some of the projects that we have ongoing. It doesn't mean that we're not working. We are working very actively, but of course, it's difficult to move factories when you cannot enter a country.If we look at a little bit more on the front side, we continue to see a very strong growth on the online traffic. We ended up 2020 with 50% more visitors than 2019. Of course, this is the result on one side, so the underlying growing trends on expectation, but also the fact that we are investing in that area. And this is going to be extremely positive now when we are moving into more B2C closer to the customers with the new software that we are launching in Q1. The same is when looking at social media, where we also see very nice improvements. This is another area where we are going to continue to get closer and closer to the end users, the consumers, and create pool through the value chain.If we look at our outdoor initiative, this is a question that we have got a couple of times. Guys, you are talking about outdoor, but in reality, do you have a channel? Do you need to build up new channels? Well, what we are trying to show here is that we already are present in these channels since many, many years. What we are doing now when launching new products for the outdoor market is really to become more relevant for many of these customers. As you can see, number of stores, we had a great growth last year. So we have 15% more stores with our products that we had 1 year ago. 3,000 independent dealers, 30 national accounts and we are going to grow in this area quite a bit in the years to come. The same is in terms of e-commerce. We are today serving 40 real e-tailers. So you have today, a combination of wholesalers that also have an e-commerce platform. But in this case, we are talking about pure retailers. So that's also growing dramatically. And you can see during the second half of the year, that we could see an organic growth of 30%, which is very strong. And then the third channel that we are developing is, what I already mentioned, the e-commerce B2C channel.If we move over to the products, a lot of things going on. I already mentioned 22% -- products are critical for many different reasons. I mean, on one side, it's really about giving our sales organizations the opportunities to show up innovation when meeting the customers. But then at the same time, we should not forget that with every single product that we are launching, we also have very clear targets in terms of sustainability, in terms of cost reductions, in terms of delivering, serving more features to the market. We see innovation as one of the keys to reduce environmental impacts and improve resource efficiency across the entire value chain. We are revamping the entire product range for the traditional products, the traditional industries where we're were in. At the same time, as you know, we're also entering new markets. And we are fully convinced that we are going to reach the 25% target on Innovation Index that we have in 2021.When looking at some of these new products, we are introducing a total new generation of air conditioners for the RV industry. It's the first generation of air conditioners that we are launching, which is totally modularized. We are reducing the number of decibels by 5 decibels, which is a lot in terms of noise. We are increasing cooling capacity by 10%. We are reducing weight by 14%. We are reducing SKUs by 50%. So in reality, what we are doing is delivering more for less.Another product that we have great expectations on is our new food delivery box on the mobile delivery side, to be installed in mopeds and motorcycles. We introduced this product to the market. We showed the product to the market in combination with CAKE, our partner in this project, and got very, very positive impressions. We are in a situation just now where we are talking to all the major delivery companies -- food delivery companies in the Nordics, just now. And at the same time, we're also talking to a number of vehicle manufacturers. The product will be available for sales during the second half of the year.On the outdoor side, which is one of the areas what we invest in. We introduced the new range of passive coolers, the new patrol iceboxes, which is complementing obviously the active side that we have. We have always been in passive. But what we are doing just now is that taking passive just to the same level of importance as active, especially in the American market, which is typically a passive cooling market. We have great expectations now when we are building this outdoor organization. That is an important step to become more relevant for customers. And the product is available from December last year.Then coming to Twin Eagles. We were extremely happy to announce the acquisition yesterday. This is, for us, really not just a company. It's a growth platform for residential in the largest market in the world, the U.S. As you know, we launched MoBar a few months ago. We have been developing the distribution organization in the U.S. We have today 250 different distributors signed just for MoBar, which is a fantastic development. We're starting to get very nice orders. But of course, all of a sudden, we are acquiring a company having a strong brand name, a strong reputation, very good products and our distribution network of another 400 distributors across the country. So on one side, looking at the company as such, it's a fantastic company, having very nice growth, very nice profit margins. But at the same time, we see as well that Twin Eagle is going to help us to get pool to MoBar and the new residential products.Two main brands, Twin Eagles and Delta Heat, 130 employees and annual sales USD 34 million. And as we communicated yesterday, EPS accretive from start.Then moving over to the cost side, the restructuring program, no new locations affected in the quarter, but a number of employees on the existing locations were affected during the quarter, ending up at totally, so far, 800 -- close to 880 people. We booked 18 million more in the quarter, ending up or giving us 232 million booked so far since we initiated the program in Q3 2018.And with that, I would like to leave to -- leave over to Stefan. Please?
Thank you, Juan. So starting off, commenting on the COVID-19 impact. For the full year, on the net sales, we of course have seen a significant impact, but mainly related to the first half of the year. EBIT-wise, a notable impact on profit, but that's, of course, also mainly related to the first half of 2020. We saw significant lockdowns during Q1 and Q2. And then we have seen a very strong demand coming back in the second half. And we have not seen any significant impact from the lockdowns in part of Europe during Q4. However, we have seen a recovery, as Juan mentioned, in the Pacific area after the lockdown of parts of Australia.If we go over to government grants and other support measures, you can see that they have been very small in the fourth quarter, SEK 40 million in government grants, and you have to take into consideration that we, every quarter, have had a certain level of government grants also in the past. Other support measures, it's almost insignificant. So the government grants and the other support measures, they were to its absolute majority related to the second quarter 2020.So if we look at the key activities. As you have heard before, we had closed factories and sales offices during the first half. We took measures to address our cost base, ended contracts with consultants and temps and immediate hiring freeze. We did the agreement on the new loan facility, as you know, and we have been managing supply chain and inventory buildup. The second half was a total different picture. Staycation was driving a very strong market demand, as you know. We have to work very focused on increasing capacity in our supply chain. And we have also had outbreaks in our own operations, which we have had to handle and which we have handled in a good way. And then we have managed the second and third wave market lockdowns in Australia and parts of EU in a good way.Moving on to items affecting comparability and taxes. If we start with items affecting comparability, they are positive SEK 48 million in Q4 compared to minus SEK 60 million in Q4 last year. Behind that, we have a gain of SEK 66 million related to a sale of fixed assets. It's a sale and leaseback transaction. The Q4 cash impact of that transaction is SEK 436 million, as you can see, a little bit further down our cash flow statement. Then related to the global restructuring program, which is the normal content in items affecting comparability, it was minus SEK 80 million in the quarter.Moving over to tax. As you have all noticed, we have a significant negative tax cost in the quarter. That is driven by that we have put in a provision for an ongoing foreign tax dispute. And it is related to previous periods, and it is of a onetime nature. That is important to underline. Yes, we have based a provision on the most likely outcome. It's an ongoing dispute. So -- but we have used internal and external expertise to arrive at this number. We expect the cash impact to come sometime in the first half of 2021. And -- so this means that we end up with a full year tax rate of 67% compared to 28% last year. Important to mention here is that going forward, we estimate the effective tax rate to be somewhere around 27%.Moving on to cash flow, operating cash flow. You can see we had a cash conversion in the fourth quarter of 103%. It was positively impacted by the improved profitability, obviously. Working capital has been on the other side negative, and it's very much driven by the buildup of inventory, to be able to safeguard our delivery performance. If we look on cash flow -- net cash flow for the period, we have, as I mentioned before, the SEK 536 million as a positive impact, and we also have had lower CapEx, as I will come back to in a second.So let's move to the different components in working capital. On the DPO side, you can see a significant increase of number of days, ending up with 67. And it is the result of that we have been focused on working on extending our payment terms. And the most important contribution to this is that we are using bank promissory notes in China.Moving over to DSO. Here, we have ended slightly higher than the same period last year, on 41 days. That's very much driven on the mix effect that we have had a higher share of aftermarket where we typically have longer payment terms than to the OEM side. DIO ends on 103 days and is underpinning what I just said that the priority for us now has been delivery performance and meeting the strong demand, and that has ended that we have had higher inventory levels than what we have seen in the past.Okay. Moving over to CapEx and product development. CapEx ended on SEK 72 million in the quarter, 1.7% of sales. And I think we have been prioritizing hard, how we have been allocating capital expenditure resources. And we feel that we have been able to invest where it matters and -- so we don't feel that we have had to compromise significantly here. But we have a good effect on the CapEx that we have been spending.Looking on product development, ending on 2.4%, SEK 102 million. And you can see that we have gradually been increasing product development spend during the year. And I really think that we have had a high effect on the spend, which is underpinned by the increase in the Innovation Index.Moving over to net debt and leverage. You can see that we are now down to a leverage of 2.0, which is exactly on the financial target that we have. It's driven by the strong profitability improvement, both in Q3 and Q4. We have had a decent cash flow in these periods as well, and then we have had some help of the currency. So -- and the acquisition of Twin Eagle is going to increase the leverage with not quiet 0.2x, between 0.15x and 0.2x.Moving on to the debt maturity. You are familiar with this. And yes, the only thing that is closing time is a bond denominated in Swedish krona, which is maturing in February. And so we are in the process of deciding what we're going to do with that, but we also have an unutilized revolving credit facility of EUR 200 million. We also have an MTM program established and ready to be used if we see the need of that.Moving on. As we have been communicating, and we also had to delay it because of the COVID situation here, the implementation of the financial reporting related to the new organization. So as earlier communicated, that will happen from Q1 2021. So we are going from 3 regions to 4 sectors, and that is totally aligned, of course, with the organizational changes that was announced in February 2020. Then we are, as I have also mentioned earlier, in terms of sales channels, the OEM channel is going to remain as it is. And then what we have been calling aftermarket, if we are going to divide that up into 2 parts, the first one is distribution, and that's basically equipment sales through distribution channels. It's outdoor, hospitality, residential and mobile deliveries. Then we have what we are calling service and aftermarket, which is related to maintenance, subscription services, spare parts, accessory, upgrade kits and replacement products. So the sales distribution is approximately 55% on the OEM side, around 10% on distribution, and 35% related to service and aftermarket. We're also going to make some other changes in the classification in the income statement. Up to now, we have had outbound logistics costs sitting in SG&A, and we are now going to move that up into the gross profit margin. And R&D, or product development, as we call it, within Dometic, they have been sitting up in the gross margin, and we're going to move them down to SG&A, which is following what most companies actually are doing. It will not have any impact on EBIT.So for your information, we are going to, of course, restate previous periods, and we will be distributing historical numbers around mid-March, so that you will have some time to review them and potentially ask questions. And then when we are publishing our Q1 report on April 23, then we will do that according to the new structure.Last point, it's the dividend proposal. As Juan mentioned, it's SEK 2.30 per share proposed by the Board of Directors. That's equivalent to 38% of the combined net profit of 2019 and 2020. And this proposal takes into consideration the current market conditions, as we see it, and also the prioritization of a continuous solid balance sheet to support growth ambitions.So with that, I hand back to you, Juan, to make a final summary.
Thank you, Stefan. So during Q4, we have seen how market demand continues to be very, very strong. We ended up at 15% organic sales growth and a very strong order backlog. We see then user appetite for and other activities continue to be strong. And therefore, consequently, we see and foresee coming quarters to be strong. Strong margin improvements driven by aftermarket, but also lots of efficiency improvement activities that we have across the company. Leverage, hitting our financial targets or 2, and supported by a solid cash flow as we are used to. And then, as Stefan mentioned, a dividend proposal of SEK 2.30.Strategic-wise, we continue to move according to a strategy that we introduced a couple of years ago, and we see how KPIs are supporting our evolution in a number of different areas. And we continue to be fully committed to a strategic agenda and the financial targets that we communicated in connection to the Capital Market Day in May 2019. And with that, I would like to open for the Q&A session.
[Operator Instructions] Our first question comes from the line of Daniel Schmidt from Danske Bank.
2 questions for me then. Last time we spoke in connection with the Q3 report, you did provide some numbers when it came to the order backlog, and you also provided some numbers when it comes to sort of lost sales due to supply chain issues. Would you care to do the same this time?
I mean to my knowledge, we never provided we lost sales. On the contrary, we discussed the backlog and the backlog situation. And the backlog, I can comment, that is very much in parity with what we have seen on the market and what our customers are communicating. And both, I would say, on the RV side and on the Marine side. And if anything, it is stronger in Q4 -- at the end of Q4 than it was at the end of Q3. We continue to be [indiscernible]
Yes. Because if I remember correctly, you said that the backlog was up 20% last time, and you're basically saying that it's...
No, no, no. You need to multiply by 10, about. So I mean I'm sure that you are, Daniel, following the [ Thors ] of the world and the Hymers and the Trigonos. And our backlog is very much imperative with their backlog.
Okay. And then sort of -- but clearly, sort of improving then, and that's, of course, encouraging. And then In terms of the supply chain issues, I do remember actually you saying that you had impact on invoicing. If you wouldn't have that, sales would have been up 10% in Q3. Would you sort of -- would you give any quantification on that today?
It's less than we could see at the end of Q3. It is clear the situation is improving. Not at the pace that we would like to. And this has nothing to do with our factories. It has to do with the component -- access to the components in the same way as many other industries. But we see no capacity issues in our factories at this point.
But I mean it's important to underline that we are entering 2020 with a backlog that is significantly above the backlog that we have when we left 2019.
Yes, yes. Yes, absolutely. And if I got it right, improving sequentially as well.
Yes.
And then second question on Twin Eagles. Is this a product that you will bring to Europe or the Rest of the world? Or is this very much a U.S. product?
As it is very often, I see Twin Eagle giving us a product range that, of course, we are going to introduce. But at the same time, we have different taste in Europe and in the U.S. So I do believe that we need to do both. We need to try the Twin Eagles products organically in both continents, but we also need to look for Twin Eagles look-alike companies in 2 continents. We need to get residential. All these markets that we communicated 18 months ago are important to us, and they're important to us globally. The difference between the new Dometic and the old Dometic is that the new Dometic tries to build up global operations and global businesses. So I want to say residential everywhere. And you are going to get critical mass. Whenever you have a #1 in Australia, it's difficult to be the #1 in Australia, just importing a product from the U.S.
Yes. Good. But a follow-up on that. You haven't done a lot of acquisitions. It's been 2 now in 26 months. Do you feel that this year is going to be different, given what you already communicated the other day?
Yes. Yes.
Our next question comes from the line of Viktor Trollsten from DNB.
So my first question is regarding the drop-through in the different regions. I think on a group level, you have around, call it, 26% drop-through. But where is APAC was exceptional at around 7% drop-through. And just looking through your bridges in the presentation, I can note that the deviations is regarding, I'll call it, freight costs and negative FX. Is it anything going forward that should fill that you can't get higher drop-through in the other regions? Or is 26%, call it, normalized level on a group level?
Our ambition is obviously to improve all the time. I believe that. Of course, when looking at the drop through, you need to compare our performance this year, but also to look at the performance last year. And of course, things happen all the time. So I think that there is more to do. I mean APAC is the region where it's going to be the toughest, simply because we have the highest margins as well. So we have and we need to have higher aspirations in Americas, and we also see opportunities to elevate our margins in Europe. But that's also a combination of geographical mix. It's a combination of product mix. And you know that we have a clear strategy to get aftermarket to grow much faster than OEM. We need to follow the situation with the OEM globally. At the same time, as the growth moving forward has to come from distribution and it has to come from aftermarket, where we see even more potential than on the OEM side. And that will generate high margins by the port.
And also in Americas, we have -- sorry. Concerning Americas, we have to keep in mind, of course, with the delivery situation that we have had, we have had some extraordinary costs to with the supply situation.
No, no, that's clear. I just think what I'm after is that is it will take away all the [indiscernible] cost and negative aspects. Is it anything that is selling that you can't have the same drop-through in EMEA and Americas as in APAC?
Yes. But again, I'm coming back to the same. If you look at APAC, you are -- if I remember well, just now the number, 53%, 54% aftermarket; 44%, 45%, OEM. If you look at Americas, it's other way around. In Americas, we have 30%, which is aftermarket; and 70%, which is OEM. That's why we are bridging so much about the aftermarket. Aftermarket is, for us, critical.
No, no. That's clear. And just my second question then in terms of the Innovation Index, now at 22%, could you comment a bit on pricing and costs on those 22% compared to older products? And maybe just give some sort of indicative quantification of that. Is it 5% higher pricing or?
5% is pretty difficult. But I would say the mid single-digit price increases depending on the feature level. And then on the cost side, we have clear targets that we have not communicated externally. But of course, when looking at our margins in Q3 and Q4, it is clear that the new process is starting to kick in.
Our next question comes from the line of Lucie Carrier from Morgan Stanley.
I will go one at a time. And the first one, I was hoping if you could give us some guidance on how you see the balance between raw material inflation, logistic inflation that you have spoken about already in the presentation, and also FX impact as you look into 2021, so we can have a better sense of how the bridge builds up on this type of metrics?
No. But clearly so that we are seeing a pressure on the raw material side. Also mentioned on the -- at least temporary on the logistics side. Our clear ambition here is to -- with a combination of pricing and also efficiency gains that we are going to mitigate that. That's our ambition.
Sorry, and FX, please? How do you see this playing out?
We can hear you really, but you are very quite. So if you -- I don't know...
Oh, sorry. Can you -- are you able to comment on the how you see the FX playing out in 2021 on your profitability?
Yes. No, but we have obviously seen a gradual negative effect coming in during 2020 here, Q3 and Q4 in particular. And yes, depending on what is going to happen with the currencies. But if we take the current state, there will, of course, be a negative effect related to the currency here. I mean we have a total negative effect during 2020 of approx SEK 70 million on the EBIT level, and they have mostly been occurring during Q3 and Q4.
I mean, in other words, we don't know where it's going to happen moving forward, but it is already there in Q4, ac5ually.
Yes.
Sure. Understood. Thank you for the quantification on the FX. Would have been great to have it on the -- potentially on logistic inflation and raw mats, but we'll go with that. Just a second question I have was around the inventory level. You've mentioned how do you kind of have built up inventory to kind of safeguard level of services. Does that inventory kind of build up has had any impact on your margin in the quarter, considering that it was production that you, at the moment, have not sold yet? And when you talk about the low inventory level at distributors and the fact that they won't restock, how much visibility do we have in terms of that versus underlying demand? Because in the past, we had seen the distributors having very high level of inventories, which were not always kind of matching underlying demand.
So no -- I mean, concerning your first part of the question, it's -- I don't see that we have had any outstanding effects because of that. So in terms of the production volume. I'm not totally sure I fully followed your question actually. If you want to repeat it?
Yes, of course. So I guess if you building up inventory internally, you're producing, but you are not yet selling those items, but obviously, benefits on your cost absorption as...
I mean we are, of course, following the proper accounting principles. So we are eliminating any type of profit that we have made internally as we have not yet shipped the inventory. So that is something that we are following proper policies on how we are dealing with that. So that profit will come when we ship products and not when we produce the product.
And with regards to the second...
Okay. And then -- Yes, Juan.
Yes. Yes. So in regards to the second question, Lucie, how much visibility do we have into the numbers? Of course, that we are talking to our customers, we are reading anything that we can get bolt-on. And what we see is that the inventory levels just now, at the end of the year 2020, both on the RV side and on the Marine side, are around 40% of where they used to be during -- as an average in a normal cycle. So it is clear the expectation just now is that we will see a clear restocking, and that's what we see in our backlog just now. So then, of course, our RV is just now forecasting 20% growth for 2021. I mean, of course, that's still a forecast. What we see is a high demand, we see low inventories and we see that the orders are coming in. Are we going to see the orders coming in at the same pace in November this year? I don't know. But we have a clear forecast and a much better situation than we had 1 year ago. That's something that is clear everywhere. Did I answer your question, Lucie?
Yes.
Our next question comes from the line of Rizk Maidi from Jefferies.
I'll take them one at a time. So thanks for commenting on the backlog, up 200%, which is in line with, as you said, the other RV OEMs. Can you just comment on the duration of that backlog? And you think most of it can be converted into 2021? And the other question here is, can you comment on your order intake growth in Q4? I think you've given us this information in Q3. Would be helpful to get that in Q4 as well?
So I mean we are talking about the backlog situation, we have normally -- normally, what we see is back loss of 2 weeks. Just now, we see a backlog of 2 to 2.5 months. We have everything to be invoiced in 2021, as we can see just now. And sorry, the second question was?
It was the order intake growth in Q4?
Yes, yes, yes. Sorry. Sorry for that. So we have seen a similar order intake level in the U.S., where while we have seen clearly improved order intake levels in both EMEA and APAC, on the OEM side.
Okay. And the second question is on EMEA specifically. I'm quite surprised that now it's the second quarter in a row where the numbers do not match the registrations. You flagged that production in Europe is down 7% at a time where registrations are up, I think, in the 30s. Why -- I mean we already had a very low inventory levels. Why do you think sort of we're still drawing down on more inventories? And when do you think we can catch up with the...
Yes. Sorry. No, no, no. I fully understand your question because that's also our questions. Just try to understand really the dynamics of the marketplace. What we see clearly is that if we go back about 2 years ago, when the European industry was talking about high inventory levels, while we saw numbers coming through especially from 2 or main customers, public companies, we saw that we will continue to deliver, right, while they were down quite a bit. Now we see the opposite. So it is clear to me that on one side, you have inventories, on the retail side. But you also have inventories on the OEMs. And that's the combination we see. Again, to me, it's a massive difference when registrations. And again, these are not my numbers. These are the numbers from the German industry. So registrations were up 36% in 2020, while production was down 7%. So I mean we are talking about some minor numbers, is big numbers. And that's the delay that we see. The good news that I can tell you is that we see the intake comment. So now the OEMs assets are starting to move.
Okay. Understood. And really the last one, is on the capacity utilization at your factories. Currently, I think you've added some capacity in Q4. And just despite demand being sort of 10%, 15% below its prior peak, how should we think about capacity additions in 2021?
I don't think -- I mean our problem at this point is not capacity in our factories. Is getting suppliers to catch-up is really, as we said -- I mean it really doesn't matter if we have people in the factories if we are prepared, and we have 95% of the components. We are lacking 1 component. So just now is exactly the same as for many other industries. It's really to get the entire supply chain to come back to the levels that we had prior to COVID. And it takes a while, especially on electronics. I mean on electronics, very, very often, you have lead times of 9 months. And of course, that we -- as a company, like the rest of the players, we are very, very careful back in March when we saw how the world was turning negative. So it takes a way before they catch up. So I don't feel that this is -- I don't feel by any means that this is a Dometic issue. I mean, talking to customers, they are telling me that they have promised everywhere. Looking, again, the report that we have seen coming from Volvo or Scania, all of them, are commenting exactly the same. So I think it's simply very difficult to pull the break as the entire world did, and then to catch up when the world opens up again.
Our next question comes from the line of Fredrik Moregard from Pareto Securities.
Obviously, you've had some delays with regards to the global restructuring program, and that's understandable given travel restrictions and so on. But I was hoping you could maybe enlighten us somewhat on how far out these initiatives might have been pushed? And how large share of the SEK 400 million annual savings that you're looking at?
No. But as mentioned, due to the significant increase in demand, but also in relation to the travel restrictions in relation to COVID, we are looking to -- I mean 2, 3 quarters later, execution of the program compared to what we communicated in Q3 2019. And what have we been realizing so far? We -- if you related to the SEK 400 million, we -- approximately, we have realized around 30% of these savings on a run rate basis when we are standing here today. So we have been happy with the execution so far. But as we also have communicated, we have a couple of larger projects still to run to arrive at the SEK 400 million. And this project is now what will probably be 2 to 3 quarters delayed. But we are staying with our ambition that we're going to realize SEK 400 million in savings. It's more about when in time that will come.
And that will be, of course, very much depending on COVID. I mean we're extremely keen in proceeding. At the same time, as I said, with these travel restrictions, it's not easy.
Our next question comes from the line of Agnieszka Vilela from Nordea.
I have some questions, and I will ask them one by one. So starting with the outlook. So before the pandemic hit, you usually ventured an outlook for full year, both when it comes to the sales growth and the level of EBIT margins. And now obviously, you have much better visibility for your industry. So the question is why cannot you provide us with more detailed outlook for the year?
Because a company like us -- as I mentioned at Agnieszka, we have normally a couple of weeks in our backlog. Now we have 2 months in our backlog. 2 months is 1/6 of the year. So I simply believe that we need to be careful, and we need to see the stability, and we need to see that the machine is in place and that we are going to be able to commit a little bit more. So it's nothing more than that. What we can see is what we have in our backlog and the feeling that you have talking to your customers. But you talked about the second half is going to look like? To me, I think that we will make a mistake because there is still so much uncertainty.
All right. But we could hope for -- yes, in the future for an outlook from you for the full year as well or will you never return to that given the nature of the business?
At this point, it's nothing that we are discussing, should we give a formal outlook or not. So we don't have that topic on the agenda at this point. We don't see the stability. We have a lot of uncertainties. And I do believe that we would -- we -- I think we would get the market confused by giving more details in such an assorting market. I believe that we are very open in talking to you and answering your questions, whenever you raise them. But an outlook is a different story. We can communicate what we, and this is what we are doing. If you remember the lines, we are pretty optimistic about the coming quarters.
Yes. Perfect. And then I'm a bit interested in the solutions that you have for the vaccine transportations. Can you help us and tell us if it affects your numbers in Q1 at all? How big this business can be? And will it be supportive to your growth in 2021?
We see that companies are using some of our products in some markets. But I have to say that we have not developed any product specifically for these machines or any other machines. If you may remember, we used to have a medical business that was sold a couple of years before I joined the company. On the contrary, the product as such is very, very good. And of course, in a critical situation, as we are seeing worldwide, companies are using our products in some occasions, but it's nothing that we are doing on purpose at this point, we have no decision. We have no intention in moving into that market. We have so many other areas where we can grow. So I mean to put together a business, just now to see what happens in the coming 12 months, I think it would be wasting our resources. And that doesn't mean that we might not be back into America in due time, but this's not the -- this is not the time -- the right time.
Yes. Perfect. And then just a planning question. What do you plan for CapEx and R&D spending in 2021?
But I think you should look on where you have seen historically, and that's the levels that we are going to return back to when you can already now see on product development cost that we have gradually been increasing it over the year, and we are starting to come back to the levels that we have seen in the past. And if we see that it would make sense and that we believe that, that is going to be a positive return, we could also consider increasing, for example, product development spend. But as it is right now, I think you should consider the run rate and a little bit the fluctuations over the quarters as well. But I think we are happy with the effect of the investments that we are doing right now.
I hear that -- the reason, I mean if I may support the answer is really that we are getting so much more out of our investment. As I said, we are revamping in tight prudent range, the historical growth range as well as we are launching products for totally new areas. So we are getting much more with the same spend.
Great. And the last one, very short one, on the Twin Eagles acquisition. Is there any earn-out associated toward the acquisition? And also what does good margin mean?
Do we have a good margin, Agnieszka? What is a good margin for you?
Yes. Yes. I mean, if you reach your target margins, it will be quite good. So is it in line with your kind of target?
What we can say is that they are extracting margins that is above the Dometic average.
Okay. And, [indiscernible] you mentioned there will be some, yes?
Yes. It is a earn-out. And it's a nice earn-out. We would like to have nice earn-outs. So we get also the deliveries.
Yes. And can you quantify it at all or...
No, we have not. The program when your acquisitive is that you don't want the coming companies to know how much we are paying and how we are paying.
Yes. I mean we'll probably see the cash outflow for acquisition like in the next 2 quarters.
Absolutely, but I don't need to make it easier for potential sellers. Do you know how to fund information? Family companies have somewhat difficulties to find it.
Our next question comes from the line of Johan Eliason from Capla Savara.
This is Johan here. Just a short question. I think you mentioned previously, when we were talking about the Chinese tariffs that you had local competitors in the U.S. that didn't need to raise prices as needed to offset the tariffs, and that's why you couldn't basically offset them. Is this also an issue now? When you might have a bit more complex supply chains in order to fulfill the strong demand coming in North America right now? Or are you sort of missing out some opportunities because of that?
No. As we said, our ambition is clearly to compensate for both the raw material price increases and the freight increases. Then it's very much about timing. Obviously, we had already raw material prices. We have not seen that in Q4 because you have the inventories in the wind. While we are talking about freight costs, we already saw freight cost in Q4, clearly. And again, we are increasing prices, as we speak, all over the world, including U.S. And even in the U.S., what I commented before, in the previous quarters, is that we have quite a difference when looking at Marine and RV. RV is much more price-sensitive than Marine. We have been putting across price increases in Marine to compensate for the tariffs to a much higher degree than we did on the RV side, simply because it's a different market. But now we are doing that on the RV industry as well, both OEM and aftermarket.
Excellent. Then Stefan, you are guiding for taxes going forward, 27%. Is -- I guess you saw lower taxes in the U.S. some time ago when Trump lowered those, and now it looks like Biden then is aiming at hiking those. What sort of impact on your group tax rate would it be if the U.S. tax rate goes up by 5 percentage points again or so?
To be totally honest with you, the tax reform driven through by the previous President, who was not favorable for us, actually, because it's also contained a minimum taxation. Then we also had another, it's called, where you basically have to pull in earnings from other countries into the taxation in U.S., and that's actually what they are changing now. So that's also why we're seeing -- we went from -- we had 28% in 2019, and we are now seeing 27%. So it's too early to say. We have to see what the new President is going to come up with here to be able to assess that. So -- but obviously, U.S. is a big market for us. It's not the place where we have paid the most taxes so far. But it will, of course, depending on how it is going and what the actual outcome is going to be for us because everyone thought that what Mr. Trump was doing was going to lower the tax rate for every one write-off. But because of minimum taxation and this gilt regulation that actually did not really happen in the same way for us. But let's see. We will have to come back to that when we know more.
Okay. Then talking about new products, I'm actually mainly excited about this food delivery product, you talked about to improve the soggy pizzas, so I guess that's my front door. Have you tried to sort of quantify any potential impact from this area? I mean it's on these bikes, we saw, but I guess also cards could have some sort of more advanced equipment?
Yes. Not yet. So of course, that we have internal targets, but it's very, very difficult because a totally new market and as we commented in the press release as well, our intention is obviously not to compete with the people that are delivering pizza or China food. It's much more, obviously, on the premium side. But we see -- we -- as soon as we submitted the press release, we got a lot of attention from all major food delivery companies, and we are in discussions with all of them. So we got a lot of attention, both in Sweden and internationally. So for us, it is extremely exciting. This is something that we are good at. And as you know, this is an extremely highly growing fast-moving market. So we want to be part of it. And this is -- we have introduced a product, but we are just now working on a number of new products, so we can really have a complete product range. So more to be communicated in due time.
We have a follow-up question from Lucie Carrier from Morgan Stanley.
One, I was trying to understand a little bit the free cash flow dynamic going into 2021. Because if I look at the balance sheet, you have a level of payable, which is particularly high. And obviously, you've also mentioned the cash impact of your tax provision. So I was trying to understand how much kind of cash out could that represent as we go into the beginning of 2021? And my second question, I was hoping you could maybe give us some quantification around how much as a percentage of sales your kind of new outdoor product? And also when you think about your online sales, how much does that represent now in the total kind of sales that you report?
Okay. Taking your first question. I mean as I mentioned -- I mean it's -- the payable side is something that we have been working with a clear focus. And by using what you call bank promissory notes in China, you can actually extract the payment terms to 70, 80 days. So it's not that it is a onetime effect that is going to go away. It will swing with the seasonality, of course. But accounts receivables and inventory will do that as well. I think from a free cash flow, the coming year here is where you need to consider the inventory. I mean when we are starting to approach the end of 2021, I think we can return back to in a better way, starting to capture potential of improving on the inventory levels again. But it has, of course -- it needs to go hand-in-hand with the demand and our delivery performance, obviously. And then, as I said, I mean the tax provision that we have done. We estimate the tax effect of that to come during the first half of 2021. And it's around, yes, SEK 0.5 billion, if we all sum it up.
And regarding the exposure to outdoor and online sales, please?
Yes. So on the outdoor, we are a bit above 10% of our total revenues is outdoor. And as you know, we launched a range of outdoor products in the Pacific area back in June. We are launching new products in EMEA and Americas. So that's an area where we expect clear growth rates moving forward as we are becoming more relevant for our customers. If we look at -- and we are -- we have put together an organization for outdoor worldwide. Then on the second question, how much is B2C? Today, is very small numbers. So we are talking about single digit, I would say, low single digits. At the same time, as I mentioned as well, we have been working in a very fragmented way where companies in different countries were setting up their own platforms. We are going live with a global platform during Q1, and we are going to roll it out in the rest of the year. So our expectation is that we are going to have the same platform all over before year-end this year. And that's going to be -- just to finish off. It's going to be primarily the outdoor segment on one side. But we also see a lot of growth potential on B2C on the new service and aftermarket business, where we have many, many thousands of small customers today that we are serving through our organizations that are, so to say, high maintenance and what we expect to have both lower cost and higher margins to the B2C channel.
Sorry, we are not able to take any further questions due to the time restriction. I will hand it back to our speakers for any closing comments.
So thank you very much for your attention. As we mentioned previously, we are very happy with our results in Q4, and we are optimistic about 2021. So looking forward to talk to you during the coming days and, of course, in 3 months from now again. So thank you very much for your attention, everybody. Goodbye.
Thank you.