Ladies and gentlemen, welcome to the domestic Third Quarter Reports 2019.
Today, I am pleased
to present Juan Vargas, President and CEO and Stephane Frisette, CFO.
Speakers, please begin. Good morning, everybody. At this one, I would like to wish you welcome to this presentation for the Q3. I'm very happy to have with me Stefan Friestet, new CFO of Guadalupe Group. And to you, Stefan, welcome to the Q1 report.
Thank you very much.
So we move on immediately to the Q3 highlights. On the market, we are happy with the evolution in the EMEA region. We see that the market has been growing in most of the areas. APAC, despite the soft market conditions, we expect to see better numbers, obviously, also as a consequence of easier comps in comparison to last year. We still see a challenging ARVO market in the Americas, despite the fact that Q3 was the Q1 last year where we saw softer numbers.
And despite the patience on seeing improvements during the second half of this year, in Q3, we have not seen any major improvements. We see more or less the same trend that we saw during the first half. The reality though when talking to customers, when listening both to customers and to some of our competitors is that they view an easier way forward. It's clear the inventories are coming down, but it's nothing that we see in our numbers so far. In terms of growth, we had a total growth of 2% with a 6% aftermarket growth.
We see good numbers in EMEA. We see also improvements in both APAC and Americas. We continue to invest in pro development, and I would say that we are accelerating. We are up 11% versus last year, and we were up also close to 5% in the quarter. And we will see this acceleration continue in the quarters to come.
We are also spending a lot of time on our new growth initiatives. What I'm referring to is, on one side, growth on the aftermarket side, accelerating there. But also starting to have a number of activities to on the new growth areas that we described in connection to the Capital Market Day, namely the patio, the outdoor and the mobile deliveries. If we move to performance, we continue to deliver a high profit level despite the challenging market conditions and despite the negative effects of the tariffs that were implemented from the 1st July to the year. Coming from that, we are working very, very hard, obviously, to mitigate the negative effects.
We opened a larger site in Mexico, back in August being 3x the size of the older factory. And we are spending also a lot of time in finding ways to reduce
the effect to our tariffs.
And last but not least, we also launched a global manufacturing footprint program according to the strategy that we have been describing now for a number of quarters. If we move on to the financial summary, as I mentioned previously, we were up 2% totally, of which 6% was organic growth, minus 6%. That was compensated by the positive effect from FX, 6%, and then we have the effect the positive effect of the capital position in December last year. EBIT down 12%, leading to an EBIT margin of 13.5% in comparison to the 15.6% that we had in Q3 last year. What we see here is a lot of improvements, efficiency improvements in large areas of the company.
We see we have been obviously running continuously fast to compensate for the volume drop all over the group. And I have to say that I'm very happy with how the team has been performing. We are comparing the last year September 2019 with 2018, we were down 1100 people approximately. And as you all know, that's difficult to achieve in such a short period of time. And we have also been working very hard on the pricing side, where we see clear improvements in 2 out of 3 regions.
On the markets, more of the same on the RV is clear. We have an outlook from the American Association showing just now that on the good go for the last quarter, we should be a minus 10% in comparison to last year, but it's still to be seen. Hopefully, we will get the numbers for initiation today or tomorrow. That will be time of guidance for us, obviously. And then we have the impact of the new tariffs.
In the quarter, we have a negative impact of tariffs of €86,000,000 And that explains, as a matter of fact, the vast majority of the gap in comparison to the performance last year. EBITDA, though, is down 1% in comparison to last year. And just as a reminder, we have the amortization for trademarks, which is today having an impact there. And that explains the gap between EBITDA to a major extent. I'm extremely happy to see a very strong cash flow generation.
Of course, many of you will think that this is quite logical when the company at this point is shrinking. But I can tell you that when looking at the KPIs behind cash flow, meaning inventories, meaning receivables, meaning payables, all the free KPIs are developing in a very positive way. And we expect, obviously, to have this cash flow generation even more moving forward. We are spending a lot of time to reduce working capital. Underneath EPS, we ended up at CHF1.26, which is about 40% below Wassa's numbers, very much driven by EBITDA.
We will move over to the 9 months numbers, more or less the same trend, so 6% organic down, 6% compensating by FX and then 3% on coming from the Canva acquisition. EBIT minus 5%, leading to an EBIT margin of 14.7% in comparison to 15.9%. Percent. And in reality, the difference between Q3 and the first half is the additional tariffs on 25% from the 1st July in comparison to the 10% that we had on the vast majority of the product groups prior to the 1st July. Same story, lots of efficiency improvements, underlying efficiency improvements, a good job on reducing capacity and then pricing in all over the world.
And then just to comment that the tariffs had an impact of €86,000,000 in Q3. Why for the year to date number, we ended up with 176 EBITDA, being positive, 4%. It did into the same EBITDA margin as we had 1 year ago. And even there, just to confirm, a very strong cash flow generation, and we see that this will continue in the quarters to come. And then EKS, ending up at 4 krona at 42% or 11% down.
If If we look a little bit at the trends in the marketplace, we see obviously that the vertical end user segment that has been coming down is RV, still showing flattish on the graph, but obviously, that's a toll months only number, so we will see this ticking south in the quarters to come. While CPV, especially marine, Brazilian retail and lodging, have been developing positively until now. If we move over to our application areas, and as you all know, this is the new way that we are going to report moving forward from the Q1 next year. Food and beverage is obviously impacted very much by the RV situation, especially in Americas. Climax has been doing very well for us.
Power and Control, where we are doing investments, is developing very nicely. And other applications, which is a small part of the business, is no more than 8%, 9%. It's also developing in a very positive way. If we look at the medium time term, we see that this is the 4th quarter where we are showing negative organic growth numbers, while we see also positive effects of acquisitions. Yes, I think that even Q4, we will see some improvement, but we will see also negative growth in Q4, as we can see just now.
If we move over to innovation, obviously, one of the areas where we are working very hard on is diversifying domestic and investing even more in areas outside the RV OEM. What we are showing today is 2 new product launches. 1, hard parking cooler for trucks and specialty vehicles industry, which is very innovative, the slimmest product in the marketplace. And then on the right side, you have a new minibar, which has been awarded several times due to both efficiency, high efficiency, better design, very low noise level. And we will continue to see, obviously, that many of the investments that we have been doing during the last quarters will start showing in our numbers.
If we look at the different regions, Americas, 12% down organically, with food and beverage being impacted with clearly uneven climates by the RV OEM being negative. Power and control is flattish, and then other applications is reporting interest on growth even in this case is stands for still a minor part of the business. EBIT heavily impacted by the tariffs, 31% in the quarter, ending up at 2% in comparison to 16.7% that we were showing 1 year ago. We continue to work to reduce our cost base. We see on the negative side how the numbers on the OEM RV OEM market is impacting, and I already mentioned that that is having a major impact for us.
If we move over to EMEA, we are extremely happy to see the performance, 3% organic growth, with most of the segments showing very nice numbers. And we're especially happy to see a strong aftermarket business where we see all recent pieces show in positive numbers. On the profitability, very, very solid and continuous improvement in comparison to last year, and we have seen this now for 7 airports in a row. As a consequence of pricing, as a consequence as well of efficiency improvements, clear efficiency improvements. And nonetheless, also we see additional growth by effect of having dedicated organizations that we are starting to implement about 1 year ago.
And then, coming up with APAC, 10% organic to be compared with the minus 12% that we were after 6 months, with food average being negative even there as a consequence of the RV OEM. We see climate reporting pretty good growth as well as Power and Control. And then other applications, which is also small for the Pacific, showing a slightly negative growth. I'm very pleased even in APAC to see that our margins are holding up very, very well despite the fact that we have volume decline, we have a negative geographical mix with Pacific coming down, while Asia is positive. And then we have also negative influence.
So total mix with cooling boxes being negative in the quarter. As part we move over more to one of the major activities that we have launching. As a part of our strategy review during 2018, we identified a number of areas, and we decided as one of those areas to reduce complexity in everything that we are doing. I have been communicating what we are doing on FTUs, what we are doing on our suppliers, what we are doing on our locations, what we are doing on our legal entities, the number of ERPs, you name it. We have worked for quarters to prepare ourselves, and we feel that it is time to start execution of those plans.
Of course, the situation we see on the market with lower demand, and in combination with additional tariffs that were implemented in July makes it even more important for us to accelerate implementation of the program. If we look at the details of the program, we are expecting to get savings of approximately DKK400 1,000,000 per year. We will start seeing effects during 2021, and we will see full effects from mid-twenty 22. We will have a cost for this program around DKK 750,000,000. We booked DKK37 1,000,000 in connection to the quarter, and we will see the vast majority of the costs happening in the coming 18 months.
Focus areas is really all our locations. So we have been mapping factories, we have been mapping warehouses, and we have been mapping offices. And in all those locations, 20 locations that will be affected today, we have 1500 employees working. As we move through the execution of the program, we will inform you on the progress of working in this business. If we move over to more of the strategy execution, on the expansion side, we have seen a very positive evolution for both Systar acquisition and Kemper.
We have completed a number of very important positions to drive the new growth areas. 2 of them have already 2 of the top managers have already joined the company, the 3rd to join in the coming month. We see also how having differentiated teams, a specialization, is starting to have an effect. We have seen the numbers in EMEA. We see also the numbers in Americas, how we are growing rapidly on mobile cooling, how we are growing rapidly on CPV.
We have the awards even in the invoicing is taking a while to realize since we are talking about long term projects. And we see as well that the changes that we have done on the aftermarket organization are starting also to kick in. And from a product perspective, from leadership, even here, we have now 3 new global product managers in charge for the global products, as I have commented before, namely refrigeration, air conditioning and mobile cooling. We are increasing our investments in pro developments, starting today, 11% higher than 1 year ago. We see also how our innovation index, namely pros that we launched in the last 36 months, is starting to grow stepwise, but steadily.
So from last year, we have improved from 12% 1 year ago into 16% this year. We will see further improvements. And then on the complexity side, I'm extremely happy as well with the job that we are doing. Just now, we are down 14% on the number of SKUs that we sold during 2018. If you compare the number of SKUs that we have been selling in the last 4, 5 years, we are down 37%, which is obviously massive.
And this is also one of the reasons we're seeing improvements in our inventories, and we will see more effects moving forward, both in terms of inventories, but also in terms of cost. On the cost reduction side, manufacturing footprint has been launched, extremely important, but we also have a number of other activities to reduce the negative impact of the tariffs. Our large factory in Mexico will have a major impact moving forward. We have also upgraded our sourcing organization with our new sourcing managers in the 3 regions, and we have a new head of sourcing for the Metair group that are going to play a very important role moving forward. And I already commented inventory reduction, which again, I move simply from Cronas into number of days, we are down 15 days in inventories, which is, in my opinion, a very, very strong improvement.
And with that, I would like to hand over to Stefan. Stefan, please?
Thank you, Juan. Yes, Juan has already elaborated extensively on the trend graphs, and I will touch upon some of them in the coming slides here. So we are moving to the next page. This is the bridge on net sales, the different components impacting it, translation, FX effects, 6% organic growth minus 6% and M and A plus 10% in the quarter. And for the ones of you who are following us since a while, you are not surprised to see our exposure to which type of currencies.
The majority is, of course, towards U. S. Dollars and then it is euro, not surprising. If we just move on to the next page, we will see the same for year to date, 6% related to translation FX, minus 6% organic growth and a 3% contribution related to the Kampa acquisition. Moving on to the next one.
CapEx. We have been spending NOK 71,000,000 in the quarter, 1.5% in relation to net sales, which is somewhat down to last year. The focus of the investments is in Americas and also within the IT area. And in Americas, it's related to building up the structure, as Juan already mentioned, around our new factory in Mexico. We're looking on the product development.
We are continuing to invest in product development, as was mentioned before. NOK 95,000,000 we have spent in the quarter 2% of net sales. And it's the new level that we see. And as Fran also mentioned, we will continue to even increase from that level going forward. Moving on to the working capital development, which has been continuing to be very positive continuing trend since the Q2.
So we had a contribution of NOK 587,000,000 related to working capital in the month. And you can see working capital the Moving over to the next slide, you see how it is distributed among the different components in working capital. Improvements in all areas, but the most significant contribution is coming from reduction in inventory since the beginning of the year, but also a reduction in accounts receivables, as you can see. Moving on to the next page, summarized in our operating cash flow. You see that we did generate SEK 1,300,000,000 of operating cash flow in the 3rd quarter, and that is equating to a cash conversion rate of 157%, which is a very, very good number.
Moving on to the next, Our leverage ended at 2.68 at the end of Q3. It's impacted by the currency with approximately 0.1, which means that in constant currencies, the leverage would be 0.1 turns lower, so around 2.58. Percent. Yes, we are coming back to the outlook here. So let's continue to the next one.
We have a pretty significant amount cash on hand, SEK 3,600,000,000 as of the end of Q3. And that is, of course, then creating some flexibility for M and A activities going forward. On top of that, we also have an unutilized revolving credit facility of EUR 200,000,000 Moving over to our debt maturity profile, which is a very strong maturity profile with maturities pretty far out on the time axis. So it's a pleasure to take over such a maturity profile as a new CFO of the company. The debt portfolio, on an average, is carrying a financing cost of around 3.5%.
Moving over to the final slide here, looking on our financial targets communicated on the Capital Market Day and then comparing it to the last 12 month number as it stands after September. So we see net sales growth of 7%, of course, on its way down compared to 10%. And EBIT margin of 13.7% compared to targets 16% to 17% and net debt to EBITDA leverage of 2.7%, where the long term target is 3x. So with that, Juan, I'm handing over to you to make the summary.
Thank you, Stefan. First of all, I do understand that we had some technical problems in the first part of the presentation. I'm really sorry for that. And of course, that we will answer any kind of questions that you may have later on. If we try to summarize Q3, sales, we are very, very happy with performance in EMEA.
Obviously, we still see the challenges on the RV market, especially in Americas. And we keep on working on building up our acquisitive pipeline. Instability wise, we are holding a high profitability level despite the current conditions. We see improved strongly improved profitability in EMEA. We see a strong profit level in APAC.
But of course, we are impacted in Americas, and we keep accelerating our efforts to reduce the negative impact. And underlying, obviously, we have a lot of very good activities that are not shown in the numbers, but we see on the KPIs while we are following this on daily basis. We are clearly adapting our I mentioned previously, we are 1100 people down versus the situation last year. And if you compare that, we are 6% organic growth down and almost 40% number of employees, excluding Mexico and excluding the additional Tampa employees, I think we have done a terrific job in mitigating the negative effects of the volume drop. Our factory in Mexico will obviously be key to mitigate the tariffs.
We have already moved one product. We are just now moving additional products from China into Mexico. We will continue to do so. Last but not least, important to us to start execution on the restructuring program that we also, on one side, mitigate the negative effects of the market situation and the tariffs, but also help facilitate the company to a totally different profitability level in comparison to where we are coming from. And then last but not least, I'm very proud about the cash flow generation.
And again, defined cash flow generation, which have all the KPIs pointing in the right direction. Then we move over to the outlook. We saw the RV Industry in Americas Association coming down again with a new outlook for 2019 at the end of August. They reduced the numbers again. If we combine the impact, the negative impact of the volumes according to a new outlook and on top of that, the tariff situation, we expect to see negative growth this year.
We expect to see an EBIT margin around 14.5% at the end of this year and leverage around 2.4%, influenced obviously by the EBITDA developments during the quarter. And with that, I would like to open for questions.
Thank
you. We have a first question from Fredrik Morgard from Pareto Securities. Please go ahead.
Good morning, everybody.
Just a
couple of questions for me on the restructuring program to start with. Can you tell us something more about how you see the restructuring program playing out across the regions? Where should we expect most of the savings of this of the SEK 400,000,000 annualized to come through? And where should we expect the cost of the SEK 750,000,000 to be
taken? You will say, in reality, I mean, this will affect the 3 regions. The vast majority of the savings are coming from the 2 regions in West, meaning Americas and EMEA. And if we are looking at the cost, it will be more or less the same answer. It's going to be very much about Americas and it's going to be very much about EMEA.
Okay.
And do you see any difference with regards to timing between those two markets? Is EMEA, so to speak, a few months or 2 quarters ahead of the Americas? Or how do you see that playing out?
I think, obviously, I would say that you have 2 partial answers to that. Obviously, we were working very hard in EMEA since we know that we have a lot to do there, but the situation with the tariffs also kind of makes us accelerate our plans in Americas. So I would say that both are very important. And if you look at the profitability level we have today, both are very important to us. You have to take away Marine.
Marine is doing great. So if you look at the RV Americas and then EMEA, size wise, they are pretty similar. And profitability wise, they are not far away. So it is important to improve profitability in most of them.
Yes, sure. And the now you well, this $37,000,000 I think it was in this quarter that was related to the restructuring program. Should we expect those expenses going forward to be reported as nonrecurring items as well? Or will they be included in the adjusted EBITDA figure? No.
The cost related to this program will occur in items affecting comparability.
Thank you. We have a next question from Clara Lumsen from SLLL. Please go ahead.
Yes. Hi. This is Clara Johnson from SLLL. Hi, Graham. Hi.
And Steve as well. So I have a few questions on tariffs and then on the restructuring program. And I'll start with the tariff questions. So you saw a step up in tariffs in Q3, and I guess they will be quite tough in Q4 as well. But before your guidance of 13 point 5 percent, the margin capacity will go from basically 200 basis points year on year margin contraction.
This will lead to basically almost flat development year in Q4. So something positive will offset the position of tariffs. What is that?
Well, you have a number of things. I mean, obviously, you have higher percentage. At the same time, you also have less reduction on the volumes. Keep in mind that Q4 is a weaker quarter for us. At the same time, we also see that other segments, we foresee improvements in comparison to Q3.
You see also that APAC, which is also an important part of our business, having high profitability, is not dropping as much as we have seen during the year. And then we still expect a good situation in EMEA. So altogether and then keep in mind also that on the Q3, we had an extra impact as well on the tariffs because we were not moving fast enough. Keep in mind that the tariffs were meant to stay at 10% up to pretty late in the second quarter. So as you know, we started to work on our restructuring programs many quarters ago, and we had a different order.
So when we were building our factory in Mexico, we were taking some products from China into Mexican factory, but we were also starting to work on some other products coming from the U. S. To Mexico. And as we were planning, all of a sudden, yes, the new tariff situation appeared with 25%. So we needed to replan again.
And that cost us a number of months. So we have a number of things going on that we believe are going to support our Q4. But nonetheless, Clara, I have to say, I mean, it's tough. And you cannot take 25% tariffs on a lot of products that we are bringing from China overnight. So that's why we are celebrating yes.
Sorry, that's quite good that you're moving your production to Mexico. That's my next question. So and then what does this mean from a tariff perspective? Will you move everything that you produced in China to Mexico now? And if everything will be moved, when will we start to see the impact from that?
You will see a stepwise approach. So we have started with 1 product. So one of the products we have is fully manufacturing Mexico today. Now we are moving another 2 products. So that will take place in Q4.
And I'm not talking about planning. I'm talking about moving. So really up and running during Q4, beginning of Q1 next year, at the same time as we are planning with the next moves. So this you will see changes over time.
Right. So and then could you say anything about tariff impact next year? And then just I know you had 10% all of 2019, but then you will have 25% going into next year. So it's somewhat €100,000,000 or so. Is that correct?
The first half is not into the tough. As we are working, we expect to see improvements, clear improvement in the second half.
All right. And also, I have another question, if I may, on the restructuring program. It's quite large, it's running over 18 months, it costs you money. Are you still comfortable with doing acquisitions next year?
Yes, I am.
Okay. How far could you stretch the balance sheet? I mean, you will be at 2.4x by the end of this year. Could you go up to 3x and just feel comfortable?
I don't think I think the precondition to get into 3x is you have a major acquisition. As you know, the market doesn't open for many companies turning to €100,000,000 or €300,000,000 or euros Most of the companies in our industry are €40,000,000 €50,000,000 €60,000,000 or dollars. And if we consider acquisition of that size, it will cost us 21,000,000 to 0.15 So I think it's very difficult for me to say what is going to happen because, of course, that we will if we do 2 or 3 of those, then we will need to start considering, okay, should we take next one or not?
Yes.
If something big came in our way, then we need to think in a different way. And then we will need to take a position. So what is clear, Clara, is that we are working on a pipeline. We are adding resources to our M and A team. So we are hiring people in Americas.
We are hiring people in EMEA. We are strengthening organization as well in Stockholm. So we
see But also keep in mind, Flora, Tara, if we take Kampa as an example, as you, of course, have the ability to add the VPA coming in with target, Kampa was adding 0.1 turns on our leverage when we did that acquisition. So that's maybe something to keep in mind.
Thank you. We have a following question from Aniska Minella from Nordea. Please go ahead.
Thank you. I have a couple of questions, maybe starting with a follow-up on tariffs. Can you just remind us what's the total exports today from China to the U. S? I think that you said before that it is about €1,500,000,000 on an annual basis.
Is it correct? And also how much of that exports could you locate in the end of the Mexico?
So we go back to 2018. We were talking about $250,000,000 of export from China to Mexico. We are just now, in comparison to same period last year, 44% down. Consistently, obviously, that we have done a number of things to reduce the impact. So you have obviously the volume drop, but you also have the activities that we have been able to realize until now.
And that's my point that, of course, you have 2 things moving at the same time. Just now, we can move from 10 to 25, while at the same time, we are also accelerating some of these movements. Then when it's going to be 0? Well, I think that will be very much depending on whether there is an agreement later on or not. With some of the products, one of the questions that you need to think about is, okay, if the products are steady at 10%, are you better off by moving more from China to Mexico or are you better off by starting to move more from a hyperscale to a local country?
At 25%, it's clear that I need to credit that China. At 10%, at 10%, it is not.
Okay, perfect. Thank you for the clarification. And then just a follow-up just on the restructuring program. Of the BRL400 million that you expect in savings, how much is related to the kind of pure layers of personnel? And how much is related rather to concentration of the factories and taking down the fixed cost base?
It's very difficult to say in one go, but you have a number of things even there. I mean, one of the things, the most important areas that we will do is that we are not just consolidating sites. We intend to outsource noncore activities. So that's a very, very important parameter. Today, we're extremely vertically integrated.
When you consider the perceived cyclicality in the business, but especially the real seasonality in the business, that's customer year impact. So I wouldn't dare to tell you one number here and now. Let me let us look at that and come back to you. So this has been a positive for the plan.
Yes. But I think you mentioned that, I mean,
the kind of percent reduction savings that you can probably calculate in a way by just taking away
Yes, absolutely. We have it. We have it as part of the program.
But just keep in mind the number that we are mentioning, a number of FTAs, that's basically the gross number of the people affected.
At the store.
Yes. Okay. So the next number would be lower? Yes, yes,
yes, yes, yes. Absolutely. Absolutely.
Yes, all right. All right. And then I know that you tried to talk more about the kind of product categories or technology categories that you have. But we would appreciate still probably some comments about end markets. So if you could give us some color on the RV markets in the U.
S. But then also in Europe, how do you think the new CO2 emission rules will affect the demand? And then also what you've seen in the marine business and commercial passenger vehicle business given that there are worsening somewhat?
So we look at the RV industry. I'm sure that you have the numbers of the American Association talking about 3.5% down a year. Europe is also flattish. We have seen Europe so far performing better than I expected 1 year ago, I have to say. But of course, when you read papers every single day, you have to think what happens.
If we look if we move so, Harvey, I don't think it's going to fly next year. I think that if anything is going to be negative, again, just looking at the numbers from the American Association, keep in mind that this year, the initial outlook was about 4.70. Then in February, it went down to 4.60 in May from 4.16 and in August to 4.01. So they cannot be very good at forecasting. Just coming that way.
If we look and now they are talking about 3.5%. So it's clear that when talking to customers, when I'm talking to customers and some of them are public and you get exactly the same access to information as I have, they are pretty bullish about the situation of the inventories that now we should be starting to see growth. If we look at European business, I mean, it's not many weeks ago that we have one of the main customers across Europe. I'm sure that you know who I'm talking about. Also, being pretty positive about the quarters to come.
So what I can do, obviously, is listening to the market, listening to my customers and staying very, very, very close. But I am a little bit more cautious than they are, simply because I have seen how the numbers have been coming down so far.
And my customers are probably notoriously optimistic about the industry.
So
that's a little bit of my point. But I do believe that what Dometic has done in a very good way in Mario premium is that we have acted extremely fast. And we have protected our margins extremely fast in a totally different manner than the rest of the industry. And simply because I cannot just count on forecast when I see that the track record is not great. So we have been fast capping in advance.
And we will keep doing so as soon as we see some signals. If we look at Marine, Marine has been showing a fantastic development for us for quarters. And I'm not talking just about the fixed acquisition, but I also think about the underlying domestic marine business. We have seen Q3 being weaker on the OEM side, much stronger on the AM side. When talking to our own guys, they are still very optimistic about 2020.
They don't see any kind of numbers as we were discussing on the RV side. But I believe as well that it is clear that when you are reading media, when you are seeing what's going on around the world, obviously, if you are going to make a major investment, you will think twice before pushing the button. On the CTV, I think it's a different story. I understand that the truck market is coming down, but keep in mind our product is a pretty new product. And what we see in our numbers so far is the other way around.
So we see that the job that we have done in Americas in the last 2 years is starting to bring a lot of awards as we communicated during the Capital Market Day. We have seen also some nice awards in Q3. We see that EMEA has been developing so far very nicely. So we don't see signals of duration. But again, keep in mind that for us, we are selling a pretty new product to the market.
The penetration rate is very, very low. So even if the market went down 30%, I don't believe that we are going to be heavily affected.
And the last question for me, if I may. The 6 percent aftermarket growth in the quarter, is this the reported growth, yes? And what would be the growth if you adjust for the Campa acquisition of the currencies?
Flattish for totally with negative growth in Americas, with very positive growth in EMEA and even excluding mobile cooling in APAC, very positive growth. So we are seeing very good growth in many areas. Unfortunately, for Americas, RV aftermarket is huge and that has been negative in the quarter, but much better than we saw in Q1 and Q2. So we are getting close now.
Okay. Thank you.
And we have I forgot to mention that we have a new organization in place in Americas.
Our next question is from Olof Kjerom from ABG Sundal. Please go ahead.
It's Ulf Kjerom with ABG. Just a follow-up on Agnieszka's question on the Marine side. If we we're not talking about the market, we're talking about you and your marine business. How resilient should we think this business is if the market is weakening? Now let's say the market is down 5%, how how would your business develop in that kind of environment?
What we have seen in the last years is that, as you know, Cal Marine, Leisure Marine, Leisure Marine has been growing at a 2% to 3% pace in the last 4, 5 years. And we are talking about engine, the engine builders. We are talking about laser marine, as I mentioned previously. We have been growing something between 8% to 12%. So we have been growing 2.5 to 3.5 times faster than market.
If the market goes down 5%, I should expect that we could be flattish, slightly positive or slightly negative. But that's kind of the frame that I would expect. And we see as well in comparison to the Arby side that marine aftermarket stands for a bigger portion than RV aftermarket. So that also supports, obviously, both on the top line side, but also on the margin side, that is heavier.
Okay. That's great. The if we're talking about raw material cost, etcetera, prices coming down, plastics should come down. Could you give us an early look of what we can expect for 2020 over 2019?
We see obviously what we have this year, right? And we have seen a new one, Stefan?
No, no. But we are, of course, seeing positive effects of the raw material. So
we talked about it.
So we have 2 things moving on there as well. So we have, on one side, positive effects of raw material. At the same time, something that we are not talking about is, obviously, we are buying components to our American factories. As part of those components, they have Chinese imports as well. Of course, we have what we call for indirect tariffs kicking in as well.
So they are not fully offsetting the savings that we have on material, but they are also costing us a bit of money. Raw material has been coming down, and we see still all the KPIs for raw material being pulling themselves. So we should see additional savings.
Our next question is from Johan Eliassen from Kepler Cheuvreux.
This is Johan. Just a question on this Mexican plant that you mentioned. So you moved manufacturing from China to Mexico. But I would assume you would still import the components from China and just do the assembly part in Mexico. Is that really such a big positive driver for getting around the tariffs?
Or am I missing something here?
Yes. You are missing something there because, obviously, we are not just moving labor. We're also looking at component suppliers in Mexico, and we are looking at component suppliers south of Mexico. So you have obviously moves that you have to do stepwise. The first one is to reduce the tariffs.
The second one is also to get low cost country, so we avoid the freight cost and the lead times.
Okay. Good. And the reason why tariffs hurt now was obviously that,
as you mentioned,
you move pretty
To 25.
Yes, exactly. But pricing then can also move. But you prefer to be more cautious on pricing and the weight, the benefits from the manufacturing move rather? Is that
Well, no, no, no, no. I have to say, I mean, we had a good effect on pricing in the first half that compensated partially for the price. What we have seen in Q3 that obviously a market which is still down even if we see easier comps. At the same time, side effects are kicking in. There are limits also for how much, how aggressive can you be in such a market condition.
We will do anything we can to move prices outwards. And that's what we did. But we also have a competitive environment. And we don't see a lot of competitors moving prices. So just now, since sorry, because that's an important one.
Aftermarket is also important. So it's always a balancing act. So we were aggressive, and we calibrate. And we will become aggressive again, and we will calibrate again. You understand my point?
I mean, again, it's always a balancing act because we have an aftermarket. If we have 1 transaction, that would have been a different story. But for the aftermarket, it's important to have the installed base. So you need to put some levers for how much you can lose on share.
And coming to the share, how has that developed then in the U. S. Or in Europe, Asia Pacific?
We are I have to say that I'm happy that we are holding our share. Obviously, we have many different products. In some products, You might be losing 0.5, 1 percentage point of share on the next products. We are gaining 1% of share. So we see on our numbers, and we're talking to customers and looking at the volumes that we are very much in parity with markets.
Again, it doesn't mean that it's 1 to 1 for every single SKU. But if you look at the total portfolio, it's very, very similar. Thank you. We will be
taking our last question with Harry Zuker from Handelsbanken. Please go ahead.
Yes. Thanks. It's Karl Berthe, Handelsbanken. A quick follow-up on the restructuring program or just a clarification first. Did you say that your headcount in September was down 1100 compared to last year?
Yes. Okay. All right. Okay. So can you then maybe to some extent quantify the impact on costs from this and then maybe compare that to the restructuring program that you announced today because frankly, the SEK400 1,000,000 saving from a sizable program like this sounds rather low.
So what is the impact? What is the cost impact of actions that you already have taken in relation to this that you are now sort of embarking upon?
As you look at the savings that we have on the capacity reduction that we saw during the last 12 months, I would say is close to some €100,000,000 altogether. But again, now we are talking about something different. We are talking about people, but you will not see 1500 people leaving the company. Apart from that, what we are saying what we are stating in our communication is that we will affect 50,000 employees working in 20 locations. That's not going to be a net number.
One of the reasons for that is that at the same time, we also want to invest. We want to be more innovative. We are investing in IT. We are investing in development. And now we've EBITDA part of that.
So it is important that we do those other things. We have investments that we are going to pay depreciation for. So of course, a bulk of those monies, the €400,000,000 is people. It's not just people. We have a lot of complexity with all those factories that are working 2 quarters per year.
And where we have a lot of inefficiencies, 2 quarters every single year. So you cannot just take the number of people, put a number of krona per month and then get into the 400. That will not work out. So it's a little bit more complicated than that.
All right. And then just a quick clarification on that. And the €750,000,000 number is probably not all cash. There will likely be some impairments and write downs there as well, right?
Yes. You can assume that approximately 20% of that number is noncash.
Anything else? Should we close? So then I would like to thank you all for your participation. And yes, now we'll start working on the next quarter. Thank you.
Thank you.
Thank you. Ladies and gentlemen, I would like
to apologize for the technical issues encountered during this call. This call is now over. Thank you all for your participation. You may now disconnect.