Hello, good morning, everybody, and welcome to this call for last quarter 2024. Let's proceed immediately with the highlights. In regards to the market, no major changes in comparison to what we saw during the last couple of quarters. We still see tough market conditions. We see as well consumers still being cautious, even if camping grounds have been filled during the season. Still, the question is very much on the retail inventories and the fact that our customers seem to be still cautious in building inventories during the season, but also now ahead of the season. We have noted in the last, I would say, two quarters that we get a month that looks a little bit more positive, and then we see orders coming down again. So the feeling is that dealers do have difficulties to calibrate how much they should have in stock for the time being.
Looking at the performance, Organic Growth went down 13%. Service & Aftermarket ended up at minus 9%, which is a slight improvement in comparison to Q3. In this case, we have to consider as well that last year we had a pretty strong quarter in Q4, especially in the Marine area. We were also happy to see Mobile Cooling coming back after a weaker Q3. They came back with a better Q4, and a clear improvement as well in comparison to Q3. On the OEM side, on the contrary, while we see that Americas is improving, we saw, sorry, the ratio is lower than we have seen during the last quarters, and the same is valid for the Marine OEM at the same time as we see how the OEM in both the EMEA region and APAC is accelerating exactly as we were expecting during the last quarters.
EBITDA ending up at 7.3% versus 8.7% last year. Even here, when excluding the one-off due to the tariff recovery that we had in the US, we ended up at 6% in comparison to the 8.7%. And as you all know, we introduced a restructuring program in December 12th that will have an impact during the coming calendar years. Happy to report a very, very strong cash flow as well, ending up at almost SEK 800 million, leading to a leverage of 3.1 in comparison to 3 that we were showing in Q3. Looking a little bit deeper on the numbers, sales ended up at close to SEK 4.8 billion or 13% negative growth, with EBITDA margins ended up at 7.3%, again excluding the one-off, ending up at 6%, and reaching EBITDA of SEK 349 million. When you exclude again the one-off, it will be SEK 286 million.
Looking at EPS, negative adjusted EPS of EUR 35. As I mentioned, a very strong cash flow, almost SEK 800 million, a leverage of 3.1 in comparison to three times last year. Moving into the yearly numbers, SEK 24.6 billion for the entire year with 12% organic drop. EBITDA of almost SEK 2.7 billion, and what we consider to be still a very decent EBITDA margin of 10.8%, considering obviously the tough market situation. Adjusted EPS ending up at EUR 3.21, EUR 3.21, and operating cash flow over SEK 4.2 billion, which is the second highest cash flow ever seen in the company, in the history of the company. Looking a little bit deeper into the sales evolution, negative growth in all the segments. As we have seen, as I commented before, we see stabilization of the business in LV Americas.
We see also a lower drop in the Marine OEM, while we see the OEM in EMEA and in APAC accelerating. Happy to see MCS, as I mentioned before, and then Global Ventures. Even here, we have the MPS business, and that's also impacted by the deterioration on the RV industry. Looking at the Service Aftermarket, slow recovery. Sorry, I missed one. Let's say by channel. Looking at OEM, as you can see, has never been percentage-wise in terms of sales lower than just now, 40%. We see obviously that we are at the lowest level on the cycle and that business should start growing during the second half, as per our estimation. And then looking at the RV OEM side, it's down to 20% of the total sales for the company. Looking at Service Aftermarket, a very, very slow improvement in Q4.
As I commented at the beginning, we see really a change every second month. We see that they are buying inventory and then they get a little bit slower. In this case, I can mention that we have Marine was very, very strong Q4 last year. If we look at both the American business from a Service Aftermarket and the business in Pacific, they were in a pretty good shape in Q4, but the numbers have dropped down by the situation in EMEA and in Asia as well as in Marine. We see, as we commented as well last quarter, that people are not upgrading products. They are not replacing products, but rather repairing the products, waiting for one more season to upgrade. Looking at our EBITDA evolution over time, 7.3, but then 6% excluding the one-off. We see gross margins pretty stable, slightly down 20 basis points.
We see as well that we continue to invest. I think that this is also important to mention that we have kept investing all the time in product development and in building up our sales organizations at the same time as we are reducing capacity all the time in our manufacturing operations, distribution, as well as in administration. Number of FTEs down 15% in one year, about one-third, 33% during the last three years. In my opinion, we are doing a fantastic job in the organization, reducing capacity at the same time as we are not jeopardizing the future by reducing product development or the sales organization. Looking at the different segments, Americas, organically 6% down, stable service aftermarket, and less decline in the OEM side that we have seen before. EBITDA margin of minus 7.3 versus minus 6.2 last year.
Obviously, it's a consequence of lower sales. We continue to reduce capacity, but of course, that we are sitting on infrastructures, and it becomes tougher and tougher. Hopefully, we will see the situation in Americas starting to show a positive evolution during the coming quarters. Looking at land vehicles in EMEA, this is really what we saw together with the situation in APAC, the deterioration on the OEM side. Totally speaking, organic growth down 90%, very much driven by the OEM side. EBITDA positive, 0.3% versus 2.4% positive last year. A little bit, as the situation in Americas is very much now about keeping reducing capacity at the same time as we keep investing in product developments. Looking at land vehicles, APAC down 23%, same story, very much driven by the OEM.
We still feel very proud, obviously, of the EBITDA margins that we are delivering, 26.6% versus 29.1% one year, and it's a little bit of the same. I believe that this is important to consider, obviously, that in this case, when you have the high profitability that we are showing in a couple of segments, whenever they are dropping or the magnitude that they are dropping, it's very difficult to compensate on the bottom line. So again, I feel very, very proud of what we are doing there. The same is valid in Marine. Down 12%, we see OEM showing a lower deterioration than we saw in previous quarters, while the aftermarket was weak in the quarter. Sales margins are very resilient, 19% for the quarter.
In this case, we keep in mind, we have to keep in mind that we are investing heavily in a new product generation, in a new product area that we are launching as we speak in February. Looking at mobile cooling, organic growth down 5%, a clear improvement versus the previous period, Q3. EBITDA margin 7.4, of course, positively impacted by the one-off, but even when excluding that, we are positive in comparison to last year, even if we are showing negative organic growth. Even in this case, with lots of investments, both in the product development and building up our global resources. Moving over to global ventures, organic growth down 11%. We see growth in hospitality. This is also positive, while residential is down sales-wise. We see order intake starting to show positive numbers now for a few months.
So somewhere we start to see some green shoots, especially in the distribution area, with Igloo being better, with hospitality still driving very nicely, and residential starting to show positive order intake. While on the contrary, mobile power solutions, which is very much driven by the RV industry, is still down. EBITDA margins 5.1%, and even in this case, we have investments both in the product development area as well as in building up our global sales organization. Moving forward to sustainability, very happy to see as well the results, so injuries doing well and at targets. Female managers the same, same levels as last year, well above the targets that we decided a couple of years ago. CO2, important improvements, and we have seen very clear improvements year on year since we started really to pay more attention to this area of the company.
Audits, the same. Well, in parity, and also happy to report what I already have said, that we continue to invest in product development and innovation index ended up at 21% versus 17%. In terms of product development, we just launched a new series of air conditioners showing a fantastic performance, including also the new refrigerant that is going to be required from next year, and with a fantastic achievement, we are reducing global warming potential by 78%, which is pretty amazing. The same, we have been investing quite a lot in mobile cooling, and we saw the first results last year in terms of seeing the Igloo branded products on active cooling started to kick in on the American market. We have also extended the portfolio to more models to attract more consumers at different levels, price levels.
We are also investing, obviously, on the outdoors, on the loan areas, and how to get MPS to really have an impact on all different product areas automatically, something which is starting to take place. We also introduced a cost reduction program in December 12th. The expectation is to have annual savings of SEK 750 million once we are totally done at the end of 2026. We will see the first effects from starting in Q1 2025. We have no impact in Q4. And as you may remember, we have restructuring charges of SEK 1.2 billion, of which SEK 400 million are impacting cash flow. The whole amount is booked in Q4, and the cash will be having an impact from 2025. When looking at the businesses that we also communicated will be discontinued, we are talking about SEK 800 million altogether. We had no impact in Q4.
We will see a gradual impact in the quarters to come. As we also commented, we are looking for a number of investments that will generate or that will lead to total annual sales of SEK 1.5 billion-SEK 3 billion. As we commented, we are not going to disclose any details. It's a working process. We feel good about the progress, and we will comment more, obviously, when we have the final completions. With that, Stefan, yes. I followed the last one. Sorry. The new organization. Obviously, this is also a consequence of the restructuring program that we presented. This is a little bit what we have been doing during the last years, really getting more focused into different verticals. We have the three regional areas for land vehicles that are going to be converted into one single segment called land vehicles.
Since we have the restructuring program, we are going to take it stepwise, meaning that we are going to consolidate into Land Vehicles, but we will still be disclosing the evolution for the three regions until the restructuring program is totally completed. We are just now in the process of recruiting a new lead for Land Vehicles, global Land Vehicles, and until that person, that individual is in place, I will be heading the segments. And we are planning to start reporting from Q1 this year. Again, it's going to be an aggregated number, and we will have a disclosure of the three different regions as part of the LV. And now, Stefan, please, could you please take us through the rest, please?
Thank you, Juan.
Starting with the income statement for Q4, the gross profit margin is holding up well as we have seen also in the past, and that's the result of that we are continuously working on adjusting capacity, as was mentioned here before. We also have a sales mix effect, less OEM part of the total sales, and then we are also starting to see the logistics cost coming down. On an operating expense point of view, we have a positive impact. However, it's still higher in percentage of net sales, and we are obviously continuing to invest in strategic growth areas while we are controlling the spend in other areas, then we have the one-time positive gain of SEK 63 million related to tariff refund within mobile cooling of SEK 63 million, and it's booked on the line other operating income and expenses in line with previous handling of these types of items.
Net financial expenses are slightly up versus the same quarter last year, and net interest of bank loans and financial income is under SEK 36 million. We have FX revaluation and other items of SEK 38 million. Partially, the improvements on this line is a bit masked due to the currency effect. On the tax side, we actually have a positive effect of SEK 40 million in the quarter, and that has been impacted by the items affecting comparability in the quarter. Moving over to operating cash flow, SEK 784 million is a good Q4 number, a little bit better than what we did expect, driven by underlying earnings, but also on the development of working capital. With that, we move on to the underlying parts of core working capital.
As we see, accounts payable is stable around 55 days, the same thing on accounts receivables, 45 days on an average year, and then inventories, which we have been working very dedicated with SEK 138 million or 138 days, and the trend is continuing down. The working capital in relation to net sales is 29%, and I mean, working capital as such is coming down, but obviously, net sales is also coming down, so that's a little bit why we are a bit stuck on that KPI. As I said, the number of days of inventory, 138 days, and in constant currency, that's a reduction of around SEK 1 billion in the full year, but we continue to be committed to our target that over time we should take the working capital down towards 20% of net sales. Moving over to CapEx and R&D spend.
CapEx in the quarter was slightly higher than the previous quarters, 2.1% of net sales, but 1.3% of net sales for the full year. We will keep controlling this even though we feel that it's a bit on the low level, but that will then start to change when the overall business climate is changing. Looking on R&D spend, 3.3% of net sales compared to 2.8% last year. It includes capitalized development costs of SEK 13 million, and we continue to invest in structural growth areas like marine and mobile cooling is the most obvious examples here. For the full year, it is 2.6% in relation to net sales.
Taking a look at our free cash flow here in Q4 and in the full year, and as we mentioned before, there is a robust operating cash flow in the quarter, and it is the second best year ever supported by reduced working capital, obviously. The global restructuring program of approximately SEK 1.2 billion is included in adjustment for non-cash items. So for example, when you are looking at the change in inventory that is not impacted by the part of the restructuring program, which is related to inventory rentals. So that is a clean number. Obviously, we have a high focus on working capital optimization, and that will remain in 2025. And we will continue to carefully prioritize investment in fixed assets, as I mentioned before here. Free cash flow before M&A, the income tax paid declined in 2024, which is, of course, natural because the earnings are lower.
The paid and received interest has been trading down in 2024 as expected. So we are prioritizing to take down leverage, of course. We have said that all along. The global restructuring program includes also the investment opportunities going forward, which we have mentioned, and they will then be communicated at the point when they are realized. Moving over to net debt to EBITDA leverage ratio, we ended at 3.1 after Q4 compared to 3.0 in Q3. The EBITDA obviously is contributing slightly negative, compensated by positive cash flow effect. Then we have the strengthening dollar versus the Swedish krona that is then impacting on the FX side with approximately 0.2. As I said before, we are continuing to be very committed to achieve our leverage target of around 2.5. That's what we are expecting to take a significant step towards in 2025.
Taking a look on the debt maturity, we have an average maturity on 2.1 years. If we include the extension options, it's 2 and a half years. The average interest rate on the debt portfolio is 4.8%, and we have the undrawn revolving credit facility of EUR 280 million maturing in 2027, and we are, as always, continuously working with our debt portfolio. Moving over to the dividend proposal by the board. Proposed is to pay EUR 1.30 per share compared to EUR 1.90 per share last year, and the motivation is that it reflects a balanced view of the financial position, business outlook, and the current market conditions, and that would be 40% of 2024 adjusted EPS, and as you know, our dividend target is at least 40% of net profit over a business cycle, so with that, Juan, I hand back to you to summarize Q4.
Thank you, Stefan. So let's start first with more of the facts. Clearly, the market was another challenging one with organic growth down 12%, EBITDA that we consider to be robust considering the situation ending up at 10.8%, and a very strong cash flow of SEK 4.2 billion. If we look at the outlook for 2025, it's clear that we are entering the year with lower inventory levels practically everywhere. So even in the areas where we see no matter if we are talking about EMEA or we are talking about APAC or marine, inventories are coming down quite dramatically now when production is coming down at the same time as registrations are up or much less down than production. So we feel confident that we are moving in the right direction. The market is moving in the right direction. We are also expecting service and aftermarket to recover stepwise.
We have said that a couple of times. It is clear that we have seen a couple of times back and forth movements. We see that our customers in the distribution channels have difficulties to calibrate. The good news still is that consumers keep camping. And as far as they are camping, they are using our products. So it's going to come back. It's a question of when. And then we see OEM, and even here, I have to repeat myself, we see inventories coming down. We see that inventories in the RV side in North America have not been lower for the last 20 years. It's massive. We see also that if you look at Marine, while retail is down 7%, manufacturing is down 29%. So it should be relatively fast now before until we get into some stabilization of the market.
So from that perspective, we feel that we are a little bit closer to the trough and that we should be passing somewhere during the first half. Then strategically, I feel that we are doing a very, very good job. We keep simplifying our business. We are taking a lot of the complexity that we used to have. We have decided to run another restructuring program that will reduce complexity additionally. We are working with our investments, and we feel that we will get some of this done in the coming quarters. We are, as you know, simplifying as well our structures with LV now becoming one single vertical instead of three. We believe that that will also lead us to a faster restructuring program and additional simplification of the business. And we keep investing.
So even if we are reducing costs in all the rest of the company, we are accepting really for development where we keep investing all the time, and we see more and more products coming to the market. And the other area where we are investing is in building up some of the new business areas, both in terms of salespeople and also building up the organizations. So I cannot say that we are happy. You can never be happy with your performance when you are delivering less money than we did last year. But I'm really proud of what we are doing as an organization and fully convinced that with all the efforts that we are taking, once the market comes back, we will have a fantastic upside. And with that said, I would like to open for the Q&A session.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. Please mute your line when you have asked your question, and please limit yourself to only two questions. You can also write your questions on the webcast page. The next question comes from Fredrik Ivarsson from ABG Sundal Collier. Please go ahead.
Thank you. Morning, gentlemen. I've got three questions. First one on EMEA, obviously soft in the quarter due to the, I guess, planned production holds among the customers, etc., etc. But what do you see in here from your customers in terms of production volumes when you look into Q1, please? I mean, it's still soft.
So, I mean, all customers are communicating more on the second half than they are communicating on the first half. So, I don't think that we will see any fantastic numbers coming in in Q1. I think it's going to take the first half. Again, registrations with the exception of December. December was slightly negative. With the exception of December, we have 15, 16 months during the last period that have been positive on registrations. So that's really positive. But then we have massive, as you know, shutdowns by Knaus, Hymer, all the major players, Trigano. So of course, that has an effect. At the same time, all of them seem to be very positive about the second half.
Okay. That's clear. Thanks. Second one on the distribution business. You mentioned that the ramp-up of new products sort of supported growth in this business.
Can you give an indication of this impact? And maybe also if you could talk a little bit about the pipeline for the coming quarters. Yeah.
So I cannot give you exactly a percentage, but it's clear that we launch a totally new series called CFX5 on the Dometic brand. We launch a new series called CFX2, which is a more affordable product. We launch the new active coolers under the Igloo brand. We are launching the Igloo range both in APAC and EMEA. So without any kind of doubt, that had a couple of percentage points of growth for the year 2024. Then moving into 2025, we have a whole new range that we will be launching in Q1 and Q2 as well, both on the hard coolers and on the soft coolers as well as drinkware.
So those investments will continue, and you will see wave after wave of new products. That's one of the areas where we are betting.
That's very clear also. Thank you. And last question on the working capital and, I guess, inventory in particular. You've been reducing the position quite significantly during the last few years, as you talked about, Stefan. But what do you plan for 2025? I guess you might not reach the 20% target already this year
Yeah. But I mean, as I said before, I mean, the working capital is clearly coming down. You can see that in absolute terms. Then obviously, the KPI in relation to net sales is a bit challenging when we have the organic development as we have. But with that said, for 2025, I mean, I still see that we have further possibilities and potential to continue to reduce working capital.
And we are working with it. We have plans for it. And so will it be? I mean, as Juan mentioned, we had the second strongest year ever on operating cash flow. Will we be able to repeat that in 2025? It's probably going to be a little bit lower than that. But still, there is continuous potential to reduce working capital.
Perfect. That's all my questions.
Thank you, Fredrik.
The next question comes from Daniel Schmidt from Danske. Please go ahead.
Yes. Good morning, Juan and Stefan. Just a couple of questions from me then. Coming back to RV, but maybe more on the US side.
If I look at your numbers for Q4 and try to sort of dissect what is OEM and what is aftermarket, given what you write, it looks like the underperformance that you've had now for a couple of quarters versus the RV shipment data is looking a bit less bad. Is that just base effects, or is it you sort of regaining some momentum with the customer base in the US?
I think it's still early to say, but it looks better on the RV side, but it looks also better on the CPV side. So it's a combination of both. And then on top of that, we have service aftermarket doing reasonably well.
Okay.
So service aftermarket, when I comment that it's a little bit every second month, that's also valid for North America. You get the feeling that dealers do have difficulties to calibrate.
So we had a weaker Q3, and now we had a pretty good Q4.
Yeah. Okay. Good. I heard your comments on EMEA, of course. But it's hard to refrain from the fact that if you read Trigano's latest trading update, which was very important top line, there was a positive signal when it came to underproduction, where they basically said that they would stop to underproduce during the start of 2025. Is that old news? Have you heard anything else regarding that, or how do you view it?
No, not really. But I guess that we are back to the never-ending discussion. I mean, you have your own customers, and that's one of the parameters that we are following.
At the same time, we also have a track record, obviously, of our customers being a little bit too optimistic in comparison to what we will see for real later on. So we are simply trying to follow as close as we can. And I cannot be sitting here today and saying that I'm expecting a fantastic growth next year. I don't see that. I do believe that we will see some improvements. I think Q4 was tough. And of course, all factories are shutting down in December. But this year, as you are aware of, some factories shut down already in November. And some factories are planning to start producing again in February. So it has been a very, very long prolongation. So Q1, I believe that January will be tough for many since the factories have been closed down.
So I believe hopefully that we see some improvement in Q2 and then growth improvement for the rest of the year. And I mean, the production stock is related to that. The inventory levels by the dealers have been elevated. And when you try to estimate how that looks like between the different manufacturers, it looks different, if I say so. Some are better off, and some are a bit worse off. So it's also surprising that you maybe get a little bit different signals from different manufacturers depending on how their inventory situation looks like.
Yeah. Okay. Good.
The good news is I have to come back there, Danny. The good news in this case is that if you compare the European market with the American market, the positive is that we have registrations now for 16 months.
And of course, if manufacturing is down 20%-25%, it doesn't take that long before you are in balance again. So there is balance in the U.S. We should get balance during this year in Europe as well. And the same, we see exactly the same in APAC, right? I mean, we see heavy, heavy drops at the same time as retail is not falling by any means at the same pace.
Okay. Good. And just maybe two shorter ones. When we talk about discontinuing certain product categories, which of course announced before Christmas, SEK 800 million in total, do you have a good view on sort of the sequencing of that discontinuation? Is that going to be H1 heavy, or is it going to be gradual throughout the year, or sort of some help with modeling there?
It's going to be a stepwise. Yeah.
I mean, I cannot tell you so much more. It's going to be stepwise, and it's going to be a little bit different depending on geography as well, since the plans are not exactly the same everywhere. I mean, this is really what we are trying to simplify, Daniel, as well, by creating an R&D organization. Since we had three R&D organizations, they had different focus on different product areas in different regions. Of course, what we are trying to do is to build up something which is, when we are developing products, that we have a similar approach. When we are betting on a product range, we have a similar approach, so the intention, obviously, is to take one more step in simplification in the same way as we did with Marine or the others, and this has an impact on the discontinuation of the products as well.
Maybe just a last one, and it's been very erratic, of course, when it comes to different statements regarding Mexico and Canada and tariffs by quite aggressive as of late. Have you taken any actions in the past couple of weeks to mitigate any sort of very negative surprises on tariffs?
No, we are obviously working very, very close. We have our people on attention. We have our own tables, some impact here and there. But so far, just now, it's impossible to take any decisions. It's always the same. No matter what you do, you don't know if you are going to be right or not. We know the impacts. We know that we have capacity in the US if we needed to move some capacity back to the US. We have Canada.
It's going to be depending, obviously, on which country is going to be impacted the most. And then we will take actions. And then I think it's important to remember, keep in mind that in terms of the U.S. market specifically, we have been competing with Chinese companies during the last three years. So if it becomes heavy duties on China, I don't necessarily believe that it's going to have a negative impact on us. It might be the other way around. Yeah. Sure. Sure. I'm just thinking more about Mexico, maybe, and to some degree, Canada. But maybe on Canada, you feel that you have fairly good pricing power, and yet you can pass on any tariffs. I guess it's a bit more difficult with Mexico, maybe, given what you're sourcing from there. Yeah. But at the same time, we also have our competitors are sourcing from China.
Our main competitors are sourcing from China, both components and finished products. We are not. So I think we will need to wait. I would love to tell you, "This is what we do now because we know." Just now is simply guessing. Keep in mind that we were coming from six months of discussions on 60% tariffs in China. That would be 35% extra tariffs on existing products. And that would kill, obviously, Chinese imports. And now, all of a sudden, we have tariffs on Canada. So I think simply that we need to be patient. It's clear that we are working internally. But if the question is, "Are you building capacity in the U.S. here and now?" The answer is no. We have the capacity.
Yeah. Okay. Thank you, guys. That's all for me.
You're welcome.
The next question comes from Gustav Hageus from SEB.
Please go ahead.
Before, let me ask my questions. Good morning, guys. If I can follow up on Daniel's questions on the trade tariffs and all that, how big of a process would it potentially be for you to reverse the decision to unwind the refrigerator business in the US in a scenario where that market would dramatically improve on the back of new tariffs? I believe it was 25% of your business in Americas for RV at some point. Could you expand on that? That'd be interesting.
From my point of view, I would say that the resources that we have internally in terms of assembly operations and so on, we obviously have them still. But then in the step that we took, that we were partially outsourcing a part of it, I think it's more on the supplier base than.
And a little bit our assessment on how long-term is this. I mean, is it going to be a change that is going to be for a longer period of time, or is it a short-term reaction and so on? So it will have to be an assessment of the longevity of such an opportunity, I would say, as well.
And it's going to be judged by products and country by country at the same time.
Okay. And on another note yeah, sorry, go ahead.
No, as I commented before, I mean, all the segments have plans, but it's difficult to just push buttons without having certainty.
Yeah. That's understandable. And on another note, once you've consolidated all your RV into this global new segment, could you expand a bit on what will be the interdependencies between that RV segment and the other segments and businesses?
Very little. Very little. Yes.
So what would be the business rationale to keep it internally rather than to maybe have it live its own life eventually outside of Dometic?
I mean, at this moment, there are no plans. But again, as a company, you should never say never, right? I mean, it's clear that we are doing. You look at what we did with Marine. You look at what we did with MCS. You look at what we did with MPS, what we did with hospitality. We are building up global businesses. The rationale is that we believe that this is simplifying the structure, that we will gain efficiencies, that we will take decisions that will impact the entire globe instead of having three teams kind of driving different questions at different times. So we are doing this not with the purpose of divesting.
We are doing this with the purpose of developing. Then you never know.
All right. Appreciate that. Thanks, guys.
Thank you.
The next question comes from Martha Ford from Jefferies. Please go ahead.
Hello. I just had a couple of questions. First, on the consolidation of the land vehicle segment. I previously said that the differences between the geographical markets meant it was pretty difficult, actually, to consolidate them into one group. So what's changed your view now, and how do you plan to go about consolidating?
It's really difficult to hear you. But if I understood well, the question was, have you changed your mind? You were talking in the past that the products were different, and now you are doing this. Is that right?
Yes. Yeah. Exactly.
Okay. Okay. So it is true, obviously. Products are different.
You have different sizes, but you also have a lot of modalities. We have today in the LV regions, we have on one side some B2B. On one side, we have a lot of B2B, and we have some B2C. On the products, it is clear that you have sizes, but you still have a lot of common componentry. The way of approaching to the market is common. If you look at the factory where we are manufacturing in China, it's very much going to both the Land Vehicles EMEA and the Land Vehicles Americas organizations. And that trade will be simplified dramatically. The way of prioritizing will simplify. So you are getting very much of the similar situation that you have in all the other segments.
It's not always that you have exactly the same products, but you still have more commonalities, and you have more efficiencies by putting this together than just having it independently as it is today. And the best example there is our new air conditioning range, which is a global range building on a modular design. So that's a very good example of a global approach. And of course, if you go back two years in time, we have much more complexity in terms of products, in terms of variations. What we are doing, and nonetheless, now when communicating both the structuring program and divestments that we are taking, additionally, complexity from the different LV businesses, which makes it possible all of a sudden to have one common organization.
Right. That makes sense. Thank you very much.
And then second, on the outlook for 2025, you said that OEM as a whole would be under pressure. But given the improvement we're seeing in Land Vehicles Americas and in Marine, is there a chance that you could actually see growth in H1, or is that still the second
I'm very hesitant on H1 altogether. I do believe that we will still see OEM down. And as you can see on the OEM, we were down 18% in Q4. I don't think it's going to be perhaps 18% in Q1, but it's going to be, in my opinion, two-digit negative. And I do believe that it's going to get much better in the second half. So again, I think H1 is going to be very much about servicing of the market and distribution. And then hopefully, we will see the OEM side coming back in H2
Okay. Thank you very much.
You're welcome.
The next question comes from Johan Eliasson from Kepler Cheuvreux. Please go ahead.
Yeah. Hello, Juan, Stefan, Rikard. I hope you can hear me well. Yes. Yep. Good. I'm wondering a little bit about Q1 and the seasonality. You obviously have a very weak cash flow in the first quarter normally. And now what we hear is that your customers are pretty cautious. I heard something from Brunswick indicating that all the dealers are very late in placing orders because they know that all the suppliers can sort of deliver pretty quickly. How do you manage this? I mean, I guess you have to have some inventories available for you to be ready if there are demands, and at some time, you want to manage your cash flow. Are you doing any type of factoring or extra things like this right now, or?
No, we are not doing any factoring as we speak. No. But I mean, to address the question that you have, I mean, this is, of course, the very fine operational balancing act that we are going right now. But the interesting thing is, of course, that if we look at the last 18 to 24 months, it has just been a discussion about reducing inventory, reducing inventory, and reducing inventory. Now the discussion is both including a discussion about continuous optimization of inventory, but also making sure that we are not missing out, as you are saying, that all of a sudden, we have problems with the service level to customers. So it's a little bit of a more balanced discussion right now, which is, of course, yeah, a sign in itself, if I say so.
As I said, it's also a question of how you see orders coming in. Even if we have low visibility, we have high visibility in some areas than others. As I commented before, we start to see positive order intake now for a couple of months, for instance, in North America in some of our businesses. Of course, that there is much more about starting to build inventories. You know that when the orders are coming, it's going to happen. You will need to deliver. So the delivery discussion is when we see, obviously, OEM in Europe or in APAC is still going down high two digits. So I think that we need to do both. It's looking business by business, geography by geography.
I mean, that's the way we run the business, and that's why, again, we need to simplify as much as we can as we are doing. So we see that we don't see that as a geography, but we see different markets as they are.
Yeah. Yep. Yeah. It will be interesting to see how this plays out. On another topic, I mean, you have proposed a dividend, a solid one. Have you ever sort of considering paying in two installments to match your cash flow profile a little bit better? For example, Husqvarna is doing that, for example.
Yeah. We have considered it, but we have not implemented it. But it's obviously something that is possible to do.
I agree.
Okay. And then on another topic, you have announced that you might potentially sell some businesses.
In this program you announced in December, you sort of hiked the potential in terms of sales to be divested a little bit. Do you have any active discussions ongoing on that front, or is this much later down the road?
No. We have active discussions. We have assets on the market where we are having continuous discussions or where we are in the process, basically. And then some of the assets, they are a little bit earlier in the process, or we have been with them in the market before, and we are taking them to the market again. So there is absolutely activities ongoing, and they are in different stages. But as I said before, we will communicate around that at the time when they actually materialize.
Okay. That's all from me. Thank you very much.
You're welcome.
Okay. It's Rickard here.
We have a few questions on the web. First one for you, Stefan, I guess. How will you reduce leverage down to 2.5?
Yeah. That's the known levers to pull, of course. I mean, first of all, it's about earnings to keep on working on improving that. And I think we have certainly been taking measures with the restructuring program that we have been communicating. And also, as we have been talking about, that we are expecting gradual improvement in some of our businesses during H1 and then OEM in the later part of the year. So that's obviously going to help the earnings to improve. And then there is, of course, what I talked about before, the working capital, both the core and the full working capital, where we still continue to see optimizations that can be achieved. So that is one.
Then it was also like we heard here as a question about the divestments. When they happen, they will also contribute to reducing the leverage. And that's, of course, a positive benefit of that on top of the operational and strategic reasons for the divestment. So that is the answer.
Thank you. Next question. Can you please give us your thoughts on the upcoming bond maturities and how you plan to tackle those?
Yeah. As I said in one of the bullets when I talked about our debt portfolio, we are continuously working on that. And we obviously have some, we ended the year with SEK 4.2 billion cash at hand. That's obviously one component in this. But then we are continuously and proactively working with it as well. And then we obviously have a little bit more the longer term.
We have the 2026 Eurobond, EUR 100 million due in May next year. It's, of course, the right thing to do to start to work on that in time. Then we have to see when it actually happens. We are certainly on that. Yeah, let's come back to that when we announce the activities step by step here. We are not sitting and doing nothing. We are pretty active.
Thank you. Another one. Can you please provide some color on the exposure you have to Knaus Tabbert, receivables and revenues? How isolated do you think the legal case is?
On the legal case, I have no idea since we are not involved by any means. I cannot comment more than we are not involved by any means. On the exposure, so far, we have not seen any exposure.
I mean, we have been taking some measures in cooperation with Knaus on how to deal with our day-to-day business with them. So I think we are on top of that, and so we know what the receivables exposure is and how we deal with that on a continuous basis.
Very good. Some more cash flow stuff here. Would you be able to provide guidance on CapEx and tax outflows in 2025?
Yeah. CapEx, we have been talking about around 2% of net sales now. We have obviously been below that. And as I said before, we are going to keep on controlling that and really make sure that we allocate CapEx to the most important areas, but I mean, so that's maybe more the short term. The long term, I mean, we should be around 2% as we have talked about.
Then in terms of taxes, I mean, we have had an extraordinary year in 2024, of course, impacted by the different events we have had. And for 2025, I would say that we should assume a tax rate slightly above 30%. And that's higher than what we want. But as we see that the business is starting to come back, the way that we have organized our transfer pricing system, it's going to operate more efficiently. So I think that the first step, that's not for 2025, but beyond that, the first step is to come down to 29%. And then we know we have been on 27% also historically. So that would be a point of guidance on the effective tax rate.
Okay. Then the last web question is on the dividend decision on SEK 1.30.
If getting down leverage is a priority, why didn't you reduce the dividend more?
That was a discussion that we had in the board, and I mean, there are different stakeholders in the company, as you're well aware of, and this was a decision that was taken that into consideration. This dividend level is going to increase leverage with less than 0.1, so the judgment of the board was that this was a balanced decision.
Good. Back to you, operator.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Well, we would like to thank you for your attention for following us all this time. As I said, we cannot be happy with the results when we are delivering less money than we did last year.
But we feel confident that the market will come back and that we will see a very good upside for our investors. With that said, thank you very much, and have a very good day.