Today, I am pleased to present the CEO, Juan Vargues, and the CFO, Stefan Fristedt. For the first part of the call, all participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by pressing star five on their telephone keypad. Now, I will hand the conference over to the speakers. Please go ahead.
Good morning, everybody, and welcome to the Quarterly Report for the Second Quarter of 2025. If we start immediately with the presentation, the turbulent market conditions and tariff uncertainties continue to have a negative impact on our numbers. We see that there is still today a low consumer confidence, leading also to a negative sentiment among dealers, especially in the OEM channel. That leads also to a situation where retailers still are very, very careful in building up inventories. When looking at our performance, we ended up the quarter showing a negative organic growth of 11%, with service and aftermarket down 12%. Here, we need to keep in mind that we have a relatively good Q2 2024. Distribution ended up at - 7% organically, affected both by production stock, primarily I would say production stock in our facility in Katy, Texas. We will come back with some more data later.
Also affected by poor weather in the American markets. We ended up at - 40% with growth in the Latin American vehicle markets, while both APAC and EMEA are down. We are happy to comment that we see a stabilization of order intake in Q2 in comparison to Q1, giving also a better backlog situation at the end of the quarter than what we had at the end of Q1. Looking at our profitability, we ended up at 14%, which is in par with the profitability we showed in Q2 last year. We introduced, as you all know, a restructuring program in December last year. The program is running according to plan. On top of the restructuring program, we also have a number of efficiency initiatives that are kicking in and obviously having impacts in the first two quarters of this year.
We see Land Vehicles and Mobile Cooling showing margin increases, while Marine and Global Ventures are down in comparison to last year. Free cash flow ended up at SEK 1.3 billion, leading to a leverage of 3.3, which is also in par with the leverage that we showed in Q1 this year. Moving over to the financials, the quarter ended up at SEK 6.3 billion, with 11% negative organic growth, 7% negatively affected by FX, and 1% affected by the portfolio changes that we also announced in connection to the December communication. EBITDA ended up at SEK 877 million, which is an EBITDA margin of 14%, exactly at the same level as one year ago. Looking at adjusted EPS, ended up at SEK 1.38, which is lower compared to the SEK 1.76 that we communicated one year ago.
Free cash flow ended up at SEK 1.3 billion in comparison to almost SEK 1.4 billion one year ago, ending up again at a leverage of 3.3. Looking at the year-to-date numbers, we reached a revenue of SEK 12.1 billion, showing 10% negative organic growth, 4% negative effect of FX, and in the same manner as for the quarter, 1% in negative effect of the portfolio changes. EBITDA margin ended up at 12.3% versus 13%. Q2 had a positive impact, and we are getting closer to the largest numbers yet to date. Adjusted EPS at EUR 2.26, and free cash flow of almost SEK 900 million, leading to a leverage of 3.3. Looking at sales, one more negative quarter in terms of organic growth. Land Vehicles ended up at 11% negative organic growth, with Americas -1 4%.
As I commented before, looking at the OEM was positive for the second quarter in a row, while the negative effect came in through the service and aftermarket in Americas that did show pretty good growth, pretty strong growth in Q2 last year. Land Vehicles EMEA ending up at 8% negative growth, and APAC 17%. Marine at 11%, Cooling at 10% negative growth, and Global Ventures ending up at 11%. Even if we see negative numbers in all the segments, we see also some green shoots. We see part of the Land Vehicles, especially the commercial part of the Land Vehicles, they're starting to show positive numbers both in the quarter and year to date. We see also residential showing pretty good numbers, and the auto business that we have in Europe also showing pretty positive numbers in the quarter. Looking at the sales channels, no major changes.
In reality, we are down on OEM 1% point, while distribution is up 1% point in comparison to last year. Perhaps worth to comment that RV OEM stands today for 90% of the business in comparison to 49% of the business in 2017. It's a major transformation of the company that has been taking place in recent years. Looking more in detail to the different sales channels, starting with service and aftermarket, weakening growth in this quarter in comparison to last quarter, but happy to see that the order intake looked better during the quarter. We had a relatively clear improvement in Q2 versus Q1. We see a decline is primarily driven by LV. Even Marine was weak. On the LV side, we had a pretty strong quarter in Q2 last year. We see also differences.
The European situation is improving much faster than the American situation, and we are obviously totally convinced that the American situation is impacted by all the discussions about the tariffs. Looking at distribution, even there, we saw a weakening growth. Two major parts. One was really the production stop. What happened is that we got a stop for several days due to pollution in one of our foaming tanks in Katy, Texas. We also need to comment that we had pretty bad weather in North America and even Northern Europe. Of course, our Igloo sales are very much exposed to the North American markets. I already commented that we saw good growth in both residential and standalone products in Europe. On the OEM channel, we continue to see a sequential improvement with the improvement led by the situation in Americas. Again, the second growth in Americas.
We also see registrations in Europe being negative, -1 %. Starting negative in Q1, Q2 looks a little bit more positive. When considering that production is down much more, that's also leading us to the conclusion that we should see improvements at the end of the year or perhaps the beginning of next year. Marine still continues to be slow. Looking at profitability, we ended up at 40% in par with last year, with a good improvement in gross margins led on one side by the sales mix, but also the fact that the restructuring program that we launched is kicking in clearly. We also have a number of other efficiency measures that are improving our margins. On operating expenses, we are also down. We have been working very, very hard to contain our expenses, even if we continue to invest in strategic important areas for our future.
A lot of discussions on tariffs and the potential impact on the tariffs. Just as a reminder, we have a little bit more than 50% of our revenues in the U.S. 85% of everything that we are selling in the U.S. is produced in North America, U.S., Mexico, or Canada. The production that we have in Mexico and Canada is very much included in the USMCA exemption list. So far, we are protected. On top of that, we also have a good spread of our factories, with nine factories in the U.S., two factories in Mexico, and one factory in Canada. We don't know how the tariffs discussions are going to end up, but obviously, in the short term, it's very much about adjusting prices to surcharges, keeping it a little bit.
We have been applying changes during the quarter, both ups and downs, depending on the communication delivered by the U.S. administration. In the long term, of course, we are working on several different scenarios in order to change both logistic flows and also add more value in our U.S. factories. Looking a little bit more in detail into the different segments, Land Vehicles ending up at 11% with a double-digit decline in service and aftermarket, especially in Americas. We had a relatively good Q2 last year, and then we saw a deterioration in Q3 and Q4. On the OEM, I already commented that we see EMEA and APAC still coming down at the same time as LVA is showing positive numbers for the second quarter in a row.
We are also happy to see that registration numbers in Europe are not more down than 1% in comparison to the hefty drop that we see in production across the OEM manufacturers. Good improvement in EBITDA ending up at 12% versus 10.5% last year, with improvements in Americas and EMEA and a deterioration at APAC. We need to remember as well that APAC is still showing almost 25% in EBITDA margin despite the drop on the top line. Marine down organically 11% with service and aftermarket still challenging, but we see some improvements towards the end of the quarter, while we still see a double-digit decline in the OEM and a negative dealer sentiment when looking at the comments from the dealer surveys that are carried out during the quarter. EBITDA still pretty solid, 19.6% despite the drop on the top line.
The lower EBITDA margins are a consequence, obviously, of the reduced net sales. Looking at Mobile Cooling MPS, sorry, MCS, organic growth 10%. We had a pretty bad weather both in April and May, a little bit improving in June, part of the deterioration. We have this production stop that, in our estimation, is costing us about 50% of the drop in the quarter. That was a temporary production stop caused by, again, pollution in one of the foaming tanks, the major foaming tank that we have in the factory. It was corrected after a couple of days, but it cost us, obviously, quite a substantial drop in the quarter. Retailers, as a consequence of the weather, saw a weaker sell-through in April and May, while we saw also an improvement in the month of June.
EBITDA strong, 13.1% versus 12% last year, despite the lower net sales, and very much driven by the cost reductions that we have in the organization. Then moving over to Global Ventures, even here, organic growth, negative organic growth of 11%. Part of that is caused by the changes on our portfolio. When we stopped the deliveries of our generator product program during Q1, and that continued during Q2, it will have a negative effect during the rest of the year. We have also some major changes in some of the different segments as well. Happy to see growth in residential. We have seen now three pretty strong quarters in residential after a couple of years of negative growth. We saw a decline in hospitality and mobile power solutions from a growth perspective.
Looking at EBITDA profitability, 14.2% versus 15.1%, with stable margins in both residential and hospitality, while we see a decline in mobile power solutions. Looking at sustainability, very good progress. We are happy to see progress in terms of earned injuries being very much below our target. Our share of female managers is on target. We also see good progress in the share of renewable energy in operations, 34% versus 35% that we have as a target. Even on the assessments of high-spend direct material suppliers, where we are running at 55% versus 65% per target. In innovation, we continue to invest in innovation and ended up at 22% versus 21% in Q1. Looking at innovation, I would like to point out a couple of samples of the products that we launched during the quarter. A very important launch for us is the premium series automatic passive coolers.
This is very much in combination with using the competencies that we have in the Igloo organization and launching, again, a premium series of both passive hard coolers and soft coolers. The launch took place some weeks ago, and the products are available both in American markets and on the global markets on e-commerce. This is, again, a series of both hard coolers and soft coolers that are, in combination, creating a system that you can stack up and scale depending on your different needs. Very good performance. You can keep the cold for up to eight days. It is also that we are using injection molding, which is much, much lighter in comparison to the traditional passive coolers from Dometic that used to be in rotomolding. This is really the collaboration that we have between the Igloo and the Dometic brand on the different products.
As you may remember, we launched the first series of active coolers under the Igloo brand last year, and now we are launching the first series of premium passive coolers under the Dometic brand. We are also launching the first product in a new generation series of furnaces on the American markets in order to upgrade our HVAC programs for the American markets. This is leading to max high performance that the old series that we are just now starting to replace. Moving over to the restructuring program that we presented in December, as you may remember, SEK 750 million in expected savings, and the program should be fully implemented at the end of 2026. Until now, we have closed one manufacturing site and two distribution centers, so one more distribution center in comparison to what we communicated in Q1.
225 employees impacted, running rate in savings SEK 195 million in comparison to SEK 100 million at the end of Q1. We had cash out in the quarter of SEK 34 million. At the same time as we communicated the cost reduction program, we also communicated the portfolio changes. I commented we stopped our manufacturing some months ago. We had an impact during the rest of the year. We are working on the divestment program as well and working very hard in negotiation with a number of counterparts. With that, Stefan, could you please continue?
Yes. Thank you, Juan. Starting off with the income statement for the second quarter, I'm really happy to report that we have a 1.3% unit improvement in our gross margin, which is driven by sales mix effects of the restructuring program, but also other efficiency measures related to logistic cost, sourcing, and also the fact that we have been adjusting capacity in our factories over and above the restructuring program, which is a normal course of business. On the operating expenses side, SEK 982 million in constant currency, that is a reduction of 6%. It is, of course, still increasing in relation to net sales because of the development of the net sales. We are continuing to invest in strategic growth areas. It's not, you know, holding back everywhere where we feel that we have to invest. We are continuing to do that.
Moving over to net financial expenses, which are continuing down according to plan, based upon how our debt level is developing and coming down step by step. On the tax side, we have an effective tax rate of 32% in the quarter, which is consistent with the first quarter. However, 2% units higher than Q2 last year. Moving on to the cash flow, really happy to report a strong cash flow delivery in the quarter. On the operating cash flow side, we are continuing to work with improvements in our working capital. We had a cash out related to the restructuring program of SEK 34 million in the quarter. It's now totally, from the start of the project, SEK 129 million in cash out, relating to the SEK 400 million total cash out that we have been communicating. Obviously, the rest is going to come mainly during 2025.
We are carefully prioritizing where we are investing, but still have the feeling that we do what makes sense from a strategic point. If we look on the other components in free cash flow, the paid and received interest is trending down, and we have also been paying less tax. We did a repayment of the remaining bond that we started to repay in the first quarter of almost SEK 500 million. On the next slide, you can see how our free cash flow has been developing per quarter. It's really nice to see that we are almost on par with Q2 last year, which was, you know, our second-best quarter ever. Now we have our third-best second quarter ever here in 2025.
Taking a look on the working capital development, it has been coming down to 27% of net sales, which is the same that we have in the quarter standalone. As you can see, the inventory balance is significantly down from 6.7% - 4.8%, and the number of days is now 128 compared to 141 in Q2 last year. We still have further possibilities to optimize the working capital, and the long-term goal is to be around 20% of net sales. If you look on the different components here, you see that we have a stable situation on accounts payable. Inventory is trending down, and we also have a stable situation on accounts receivables. Moving on to CapEx and research and development, we are a little bit higher compared to last year, which more has to do with the timing of Q1 and Q2 CapEx in 2024.
We are on a normalized level, and as I said before, we are able to spend what we need to spend. It's not that I feel that we are compromising there in any way. We are on an LTM figure of 1.8% in relation to net sales. The same comment basically goes also for what we spend on R&D. It's a little bit less in the quarter, but more related to timing than anything else. The LTM level is 2.7% of net sales, and we continue to invest in important strategic growth areas, as you could hear from Juan's report on the loan in the last quarter here. Moving on to our debt maturity profile here, we have repaid, as I said before, $500 million of the remaining part of the SEK bond that we started to repay in Q1.
On the USD loan side, which is the $4.5 billion chunk that we have in 2028, $233 million of that we have an extension option to 2029, which we will exercise in the beginning of next year. The average maturity rate increased from 2.1 years in Q4 to 2.4 years now in Q2, which is obviously relating to that we have done some refinancing actions, especially in the first quarter here. Average interest rate is on 4.8% of our debt portfolio. We have our underwriting revolving credit facility available of EUR 300 million. We have also updated our EMTN and certificate program during the quarter. Moving on to our net debt to EBITDA leverage ratio, we ended on par with Q1 here on 3.3x , 0.4x higher than the same quarter last year. This is driven by the EBITDA development, mainly driven by the net sales development.
We have partially been able to compensate that with a strong cash flow driven by working capital improvements. We continue to keep high focus through the whole organization in protecting margin and reducing working capital. We stay fully committed to our leverage target of around 2.5x EBITDA. However, it's difficult with the current macroeconomic situation to talk about the exact timing of that. We stay fully committed on that. With that, Juan, I hand over to you for summarizing the quarter.
Thank you, Stefan. As a company, we need to control what we can control. The market is nothing that we can do about. Of course, I'm not happy to see that one more quarter we are shrinking as a company. At the same time, I feel very, very proud of the job that the organization is performing, which is leading to a reversed performance with maintained EBITDA margins despite the lower net sales. We are also happy to see the cash flow continue to deliver at a very high level in a tough macro environment. Of course, the situation with the tariffs is affecting, as I commented before, consumers. It's affecting the value chain dealers, and everybody is very, very careful in building up any kind of inventories. The uncertainty on the market is still there, but we have seen a stabilization of the order intake.
We see as well easier comps during the second half. In normal circumstances, we should expect a gradual recovery in the section of the market and distribution. The question mark, the main question mark, is the tariffs and the effect that tariffs might have on consumers and dealers' sentiments. Strategically, we continue to invest in our growth areas, both in product development, innovation, and organizations in a number of areas. We continue to do so. We are also happy to see, obviously, that the global restructuring program that we launched in December is kicking in and having a very nice effect on our numbers. 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.
Do we have any questions?
Yeah, there is.
The next question comes from Johan Eliasson from Kepler Cheuvreux. Please go ahead.
Yeah. Hi. It's Johan at Kepler Cheuvreux. Hi, Juan. Hi, Stefan. I'm Martin Dodger.
Morning.
Testing your equipment. Working well so far. I have just one question regarding the free cash flow. I hope you can hear me well. Was there anything particularly impacting the free cash flow in this quarter? How do you see the cash flow pattern in the second half of the year? Is it the normal seasonality, or is there something we need to bear in mind? Thank you.
Yeah, no, there was nothing particular more than that. We are working very, very hard with optimizing this. Obviously, inventory has played an important role this quarter as well. We also did a very good job on the accounts receivable side this quarter, which is something that we are obviously working with on a continuous basis. I would say, I mean, the way that the cash flow should continue to develop here in the coming quarter, we need to consider our seasonal pattern where Q2 is obviously our strongest cash flow quarter. I still see that we are going to continue to deliver robust free cash flow numbers here, not to the level that we have been doing in the last couple of years, but still robust.
Thank you very much. In the second half of the year, anything particular that will impact coming from the restructuring program, or is it sort of gradually also in the second half? Thank you.
It will be gradual measures that will be having a gradual impact on our numbers.
In general, the restructuring program, as we said before, is according to plan.
Absolutely.
We are following the plan that we have been laying out. As you remember, you want $300 million is the target for 2025.
Excellent. I have no further questions. Thank you very much.
Thank you.
Thank you.
The next question comes from Henrik Kristiansson from DNB Carnegie. Please go ahead.
Yes. Good morning, gentlemen. I have a question on the gross margin improvements. You sort of highlight the restructuring program and that has contributed to the improvement year ove r year. You also talk about these other efficiency measures. Could you talk a little bit more about that and to what extent that is temporary or also structural and permanent?
Absolutely. I mean, we have, I mean, there are different components in this. First of all, you will see that we are down a number of FDs, a little bit more than 800. Half of that is, you could say, factory-related or GP-related. We are, of course, over and above the restructuring program, keep on adjusting our capacity and looking for continuous improvements here. We have on the logistics side where we are both optimizing our logistic footprint, which is obviously a part of our restructuring program. We also see that we have been pretty successful in some areas on our sourcing improvements in the next five years. Those are the main components of that. You obviously also have a mix effect here, as I mentioned.
Even though service and aftermarket did not develop according to plan, it's still a larger share of the total than because of the development on the OEM side. Those are the components, Henrik.
Thank you. My second question, just an update on the legal situation on the earnout. What's the latest and greatest there, please?
Yeah, it's no news. We have the date in September here, which we are working towards. Other than that, from our point of view, there is no change. We still believe that we have a good case.
Great. Just related to that, what's the amount that you have on your balance sheet booked for that earnout?
For the time being, it's around $66 million U.S. dollars.
Perfect. Thank you.
Of course, that doesn't have anything to do with what we believe the outcome is going to be. It's just something that we work with the auditors on a continuous basis.
Of course. Thank you.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.
Yes. Good morning, Juan, Stefan. Sorry, I just wanted to say, first of all, that I missed most of this call. Maybe I'm asking questions that have already been asked or addressed in your prepared remarks. Stefan, you did mention that the savings program was running according to plan, and it sounded like maybe you were even doing better than you expected on the FD side in production. Did you also mention how much of these 300 had been realized already as of H1?
Yes, we are on $195 million on an annualized pace now. We are moving towards the $300 million in a good way.
Do you mean annualized as of Q2 being annualized, or do you mean H1 being annualized?
If you as the pace, we are expecting to be on a pace of $300 million. It doesn't mean that we are going to see $300 million in.
No, no.
On the target of being on a $300 million pace when we come to the end of the year, we are on $195 million now.
That means basically that you did around 50 in Q2 then.
Yeah.
Yeah. Okay. Good. You also, of course, write about the production stuff that you had in Q2 in Igloo. Is that entirely behind us now?
Yes, it is.
Yeah. Maybe some sort of regulatory questions might be difficult to answer. There are two things happening, if I'm not mistaken, and maybe things have changed recently again. As I understood it, at least a couple of weeks ago, there was supposed to be a 50% tariff on steel and aluminum content in appliances as of June 23. Is that now in effect? Is that impacting anything in the market in terms of market dynamics? On top of that, I think the big beautiful bill that came out is suggesting tax deductibility on car loans, which I assume also impacts RVs. Do you have any thoughts around these two factors and any sort of implications or any talk about it that you've heard so far?
Not more than we are obviously trying to figure out what that means to us. So far, it doesn't mean a lot, simply because we are still under USMCA protection with our products, the vast majority of our products, I would say. What we can say is that we have kind of changed our surcharges to the market. I think this is the fifth time in the last 6, 7 weeks since the first time. It's a lot of changes. Unfortunately, that's the problem just now in the American market, uncertainty that these changes create. From a European perspective, we don't import basically anything. There is no exposure, so to say. We feel confident. That's the reality.
We feel that we are working very, very close to the market, that we have a lot of people spending a lot of time trying to figure out, and that we are in continuous dialogue with our customers.
Then concerning.
Sorry, go ahead.
[Crosstalk]
No, okay. Sorry. No, I sort of, because with all these changes, it's really hard to keep track, and I guess for you too as well, I think it's been quite clear that on a relative basis, you stand out a little bit as a winner when it comes to, if this is still true, when it comes to 50% tariffs on content and appliances. Is that increasing interest from your customers to have a dialogue with you?
I think, yes, we are quoting a lot. At the same time, we also see, as I'm sure that you are aware of, that the expectation from the market just now is that the remainder of the year, the RVIA is predicting lower numbers than we have seen in the first four months. We had positive growth on the market from a production perspective in the first four months. They came in with minus 15% in May, and the remainder of the year is expected to be negative. Yes, we are getting a lot of requests. We are quoting quite a bit, but still, I think it's early days. At the same time, we agree, our position is obviously that today we are competing primarily with Chinese imports on the appliance side.
Of course, if we are talking about refrigeration, that's really the product group that cost us quite a bit of market share a few years ago. Today, we are pretty much protected.
I think you answered it, and maybe you talked about it before, but you write that you are growing in OEM LV America in the quarter, and we only have two months officially being out in terms of shipments. I guess you guys know what June ended up with maybe, but for April and May, it's - 6%. At least that rhymes with what you are basically, what I asked about. Is that a fair assumption?
Yeah. I mean, we have positive growth on the OEM side in Q1, and we have positive growth on Q2. Q2 was higher than Q1.
Okay. Thank you. Given the RVIA forecast, which is, of course, indicating declining growth in Q3 and Q4, if you stack that up against what you have done in terms of trying to get back into the market, do you believe that you can still persist growth in LV America's OE business, even if you continue to see the market coming down in the second half of this year?
What I can tell you is obviously that we will do anything we can, obviously, to regain part of the share that we lost a couple of years ago. Of course, depending a little bit on the tariffs and how the tariffs end up, that will play for us. We see positive growth, and we see that the order intake is also stabilizing. The future will tell us, Daniel. We will do anything we can to deliver.
Great. Thank you. That's all for me.
You're welcome.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. The next question comes from Agnieszka Vilela from Nordea. Please go ahead.
Thank you. Apologies if my questions have been answered. I also missed the beginning of the call. Maybe zooming into the Mobile Cooling business, you've delivered quite solid profitability in the quarter despite lower organic sales growth and some production issues. Could you just tell us what was the main driver behind the profitability improvement in Mobile Cooling?
We have seen these improvements during the last few years. I don't think that the quarter is that exceptional in comparison to what we have seen as improvements. It's clear that we are working on our efficiency in the different factories, both in the U.S. and what we are doing in Asia. We are improving in our products as well. We are launching new products that are carrying higher margins than we have seen historically. We have been working, obviously, also on our channels. We are getting more in front of the sporting goods and a little bit less from mass merchandising, which is having a positive effect on our margins. Our intention is obviously to continue exactly in the same way.
On top of that, we also have had some tailwind on some of the important raw materials that we have in that segment.
Yeah. Perfect. Understood. Maybe just coming back to the strategy for Mobile Cooling division, do you plan to add any more kind of adjacent product to your cooling box offering within that business? Also, how important are the hydration products for you?
It's a super important product group, and we are working on that without any kind of doubts, both under the Igloo brand and the Dometic brand. As you know, both Igloo and Dometic are positioned in two different ways. We already launched one year ago the hydration part for Igloo, and we are working on the Dometic side. We launched a couple of years ago, and it has been developing better than our initial expectations. We are taking just now a new series that we are working on that we are going to launch in the future. I mean, you know, Agnieszka, as well as I know, that 65% of the Igloo's revenues is coming from hydration. That tells you how important it is, both from a revenue perspective, profitability perspective, but also from a branding perspective.
Perfect. Thank you. On APAC, my last question, really, -1 7% organic growth. Is it solely the market, or are there any changes that you see in the competitive landscape?
It's very much the market.
It's the market.
It's very much the market. The RV business has been super depressed as well. It's clear the RV industry is very much a global industry and, of course, very much impacted by inflation and interest rates kicking in everywhere. We had a delay, especially Australia came in. The decline came in later. It came in, in reality, in Q2 last year.
Yeah, perfect. Thank you.
You're welcome.
The next question comes from Fredrik Ivarsson from ABG. Please go ahead.
Thank you. Good morning, Juan and Stefan. I also have to apologize. I got into the call a bit late. You might have discussed this already, but let's try. You mentioned in the report a sort of stabilization in the order intake. I'd like to dig into this statement a little bit more if you would be open to. Would you mind maybe sharing how the order intake is developing in the various segments?
Yeah. It is clear that we see clear stabilization both from a service and aftermarket and distribution, while the OEM side is still low, but a little bit better than we have seen in Q1 and Q4 last year and Q3. Q3, Q4, Q1 this year, OEM was pretty negative. It is still negative, but not on the same magnitude. Coming to service and aftermarket and distribution, it is a little bit the same. It was negative in Q1. It is pretty flattish in Q2, slightly negative, but still much better than Q1, which means obviously that the backlog situation at the end of Q2 is also better than the backlog situation we had at the end of Q1. You have to keep in mind, obviously, that we are not sitting like in my former company with six months of backlog, right?
That is why, knowing we know that the order intake, the backlog situation, and the fact that comps should be easier since the OEM market, especially in APAC and Europe, started to decline pretty heftily in the second half of last year, should bring some optimism on our numbers moving forward.
Thanks. That's helpful. If you were to dig into the OEM channel, what do you see in Marine versus RV, please?
I think it's pretty similar Marine. If you look also at the RV dealers in North America, there is still a negative sentiment among dealers in the North American market, obviously very much impacted by all the tariff discussions just now, where people don't know what are going to be the consequences in the medium term. If we look at the European business and if we look at the APAC business, we are a little bit more optimistic based on the fact that registrations are down 1% in Europe and pretty similar in Australia. At the same time, as production has dropped quite dramatically during the last three, four quarters, hopefully, we will see improvements at the end of this year, beginning of next year. I think to me just now, it's very much about the American market.
The cycle is kind of moving as we expect it from an OEM perspective. The question mark just now is very much America's view to the tariff situation.
Great. That's all my questions. Thanks, Juan.
You're welcome.
The next question comes from Daniel Schmidt from Danske Bank. Please go ahead.
Yes. Just a short follow-up, Juan and Stefan. On Marine, you did launch, or it sounded like it was a big event at least with the gyro. Maybe you commented on it already. Sorry if that's the case. Did that have any sort of meaningful impact on order intake in Q2? Is that worth mentioning, or do you see that having an impact in Q3 and Q4?
We see a positive order intake. The number of units that we are getting orders is having an effect. In relative terms, in comparison to the total revenues that we have on Marine, it's still not substantial. Percentage-wise, obviously, we compare Q2 with Q1. It's a massive improvement in order intake. In absolute terms, it's still very, very limited. We are happy about the evolution. We are happy about how customers.
Yeah.
Go ahead.
Will those limited orders be delivered this year or is that next year?
Part of that will be delivered already this year.
Okay. Do you have any views talking about Marine? I don't think that has changed because Brunswick hasn't reported yet. At least they are the biggest player, and I think they still expect their top line to be up this year. That might change in the Q2 numbers next week. Do you see the second half sort of holding steady in a totally different way than what we saw in H1 in Marine?
I think you have it's a mixed bag. On one side, it's clear that our comps are becoming easier, right? Just looking at what happened during the entire 2024. At the same time, if you look at dealer sentiment on the Marine side, dealer sentiment is negative still today, right? They are the customers to the OEMs. I believe that we need to wait for a few weeks. As late as last week, we got the survey on dealer sentiment, and they are still of the opinion that the inventories are too high on the Marine side. It will be super interesting, obviously, to follow Brunswick, Malibu, and all the others. You have the European situation. You have the American and the European situation. The European situation, we know that Bénéteau has been very, very, very weak during the last few quarters.
At the same time, as you know, we are also very much present on the mega yachts and giga yachts, and they have been doing well. Europe has been holding up much better than the U.S. market.
Thank you, guys.
You're welcome.
Thank you.
That was the last question at this time. I hand the conference back to the speakers for any closing comments.
Thank you very much to all of you for your attention and interest in Dometic. I will repeat myself by saying that I'm not happy. We are not happy with the fact that we are shrinking our size as a company, at the same time as we feel very, very proud of the job that we are carrying out as an organization, still delivering pretty robust margins and a very, very strong cash flow, obviously, which is also taking down the perceived on the leverage. Thank you very much to all of you, and I wish you a great summer. Thank you. Bye.