Thank you very much, happy to update you on our quarter three report, everybody. Really happy to say another strong quarter for the group as we go in and summarize an ending of a summer season. As you all know, we have a big part of our sales in quarters two and quarter three, and it's been very nice to see that we have continued on a strong performance on quarter three. If we move ahead in the presentation, you can summarize that net sales grew to SEK 1,385,000,000, which was a growth of 8.5% in the constant currency. A very strong performance. What was positive to note, that it was a growth in all product categories, and that it was also a growth in both our sales regions. Strong quarter, definitely in terms of sales growth.
Our underlying EBIT improved to SEK 258 million versus SEK 238 the previous year, which meant that we had an underlying margin improvement to 18.6%. Strong net income also in the period, generally a very positive cash flow as well in the period. Several of you, I believe, were participating in our Capital Markets Day, which we held in September in Stockholm. At that Capital Markets Day, we also announced both the new four product categories structure that we will follow up on, as well as importantly, also raised financial targets for our profitability from 17% EBIT to 20% EBIT target for the long term.
Many good things happening, and later on in the presentation I will also share some images from the global key fairs that we have been extremely busy at in the year, in the quarter, in showing new products that will be important for our 2018 season and beyond. If we go to the next slide, you can see the numbers a little bit more visually, with a, as I said, 8.5% sales growth. We are now year to date at a 10.2% constant currency sales growth for the first three quarters. If we look at, I don't see the image hasn't come up yet, but I'm sure it will. If we look at the underlying EBIT margin, you can see that we have moved then in year to date to a 13% growth on underlying EBIT for the year to date numbers.
You can also note that we didn't grow as much as we've been growing the last previous two quarters in EBIT, as we discussed and presented both in the quarter two report and also at the Capital Markets Day. We are currently in the most intensive phase we have been as a company since I joined more than 11 years ago, in terms of preparing the company for big introduction, both in the current categories that we are big in, so Sport & Cargo Carriers, RV Products mostly, but also entering heavily into new categories as strollers and luggage. That means currently we're spending significant funds on product development and sales launching, participating in fairs, et cetera, for these categories.
We have, despite doing all those key efforts, actually also in the quarter, been able to generate solid EBIT fall through, thanks to the improvements we've been talking about in distribution and in still being able to create economies of scale in all other back-end functions. We're still able, with all that push for future growth, to generate EBIT margin improvements even in the quarter. We're very happy with the performance also on our profitability. If we go to next page, we can see the two sales regions we report in and the net sales development. Here I'm happy to say that we continue for the third quarter in a row now to show growth in region Americas.
I think many of you follow a lot of other outdoor and sports related companies and other consumer brand companies that are global players. You are surely hearing from them that Americas is a more, and specifically U.S., is a more challenged geography than Europe and Asia at the moment. I'm very happy to say that we grew in the quarter with 3.4%, there were about 3.8% growth year-to-date then in region Americas. When we talked about the company late last year and entered the year, we said it was key that we wanted and strived for making sure that both regions contribute to the growth. It's therefore very positive to see that that is the case in the year.
When we entered the year, we also talked a lot about how the very strong performance in region Europe and rest of world in 2016 would be difficult to repeat in 2017. I'm therefore very happy to say we are continuing with a fantastic performance in region Europe and rest of world, where we are double digits growing in all quarters and are growing 11.2% this quarter and a year-to-date growth of 13.3%, which is fantastic numbers. The big difference of growth pace, as we have highlighted in previous quarter calls, is very much associated with both the exposure to the various categories. What I said in the beginning is very important. For the first quarter, in a very long time, we showed growth in all the four product categories that we've discussed.
Sport & Cargo Carriers, Packs, Bags & Luggage, Active with Kids and RV Products all showed growth. They are, however, showing different pace of growth. If you look at that exposure, as we discussed also at the Capital Markets Day, we have a more positive exposure to the fastest-growing categories in region Europe and rest of world. Overall, a very strong performance actually in both regions. If we turn to the next slide, I can give you a little bit more than what is behind driving this performance and what are the key things going on. If you look at it, the key for driving growth in this company is that we consistently need to deliver new great products that attract consumers to buy them. Therefore, it is a continuous performance of how well new products are perceived and received by the consumers.
I'm very happy to say that all our P2000 product launches that were done then in the Q2 period have really fared well and continued to grow very nicely in the summer season. We often repeat that in the beginning of the year, we will know that our retailers like our products because they list them and they show them in prominent position in their stores and on their homepages. It's only when we've really seen the summer season fully develop that we know the consumers really like them as well. Here I'm very happy to say we've had a very strong positive consumer reception also of the products we launched in 2017. Within the Sport & Cargo Carriers, our by far biggest product category, we continue to have a very strong quarter.
Generally, I would say every part of the business, aside from one small component, performed very well. Even if it's not fun, let's focus on what was the small and underperforming part. When we sold our specialty division earlier in the year, we had also made a decision that some products were more associated to the rest of what Thule did in around accessories to bring your gear on a car. That part was some OE sub-supply to automotive players for pickup truck accessories. These were relatively seen lower margin businesses, and we knew as they were contract-based OE businesses, that it wasn't a business we would pursue aggressive growth in. Here in the period we saw some decline, and that type of decline will continue in that small subset category also in the coming quarters.
Overall, all the other categories, the major categories like bike roof rack and boxes are performing well. We are very happy with the overall performance of Sport & Cargo Carriers. If we look at Packs, Bags & Luggage, it's still a mixed bag as we put it there. It is the fact that we in the new focus category luggage, where we have a big long-term ambition to become a serious contender. We had some very nice growth numbers with our Thule Subterra luggage launch, a full collection for the modern business traveler. In what we call sport and outdoor packs, so your hiking backpack, your bike, your transport case, et cetera, there we also continue to show very nice growth with the new launches we've done over the last few years. Overall, that part of the business is doing very well.
In what we call the everyday bag, so this is the small laptop backpack, it's the small attaché case, it's the small bag that you have to work, and maybe you go to the gym with your gym shoes and some other stuff with you, or when you go to campus, if you're a young student. Here, we actually did okay. We still want to do better, but we're seeing finally that we are coming to those growth numbers we want to see in this category. We are also launching a number of very exciting new bags in this category. It feels like we are now finally coming to the point where we see the right contribution from these type of everyday bags.
We have a legacy type of product that we've been in for a very long time, where we are a little bit of a last man standing on CD wallets and small little cases for hard disk drives, et cetera, under the Case Logic brand, which is very much exposed mostly to the U.S. market. We know that that is a market where we will not see growth, but we are doing a better job in holding down the decline. As, of course, the category is slowly shrinking, it will have a lesser impact in the overall Packs, Bags & Luggage performance. It was therefore, as I said, positive to see that we grew in Packs, Bags & Luggage in the quarter, and it promises well for the mid and long term.
Within Active with Kids category, we had a very fast growth across all categories, so both strollers, child bike seats, and for our multisport bike trailers. We are growing very nicely in both regions. Overall, a very strong performance across the board in what is set to become a key category in the coming long-term years. Finally, RV Products, fantastic market, continues to be hot. There is some debate if it's 13%, 14% or 15% growth in Europe, but it's around those type of numbers. As we have said in previous quarters, we are also outpacing that growth with a very strong performance in the market. Market doing well, we are doing better. Very happy with RV Products performance. If you look at the quarter, Q3 is an incredibly important quarter in terms of global fairs.
Almost all of the major global fairs are taking place in this period. We have now, over the last three months, been out and about showing our new products that will hit the marketplace in 2018. As I have repeated many times every year, in fact, we've never shown as many new exciting products as we did this year. The same applies in 2018. For the 2018 launches that we showed at these 2017 fairs this quarter, we have a fantastic lineup of new products and was received very well at the fairs. Finally, we did have a Capital Markets Day, as I said, and very importantly, for a future growth opportunity, we have told you that we have opened a second assembly plant in Poland, and with full operational steps in Q1 2018, according to plans.
I'm very happy to say we're tracking ahead of plans and the plant is already up and running with some of the first of its production line as of this month. We're well ahead of plans, and everything has gone very smoothly for the setup of the Polish plant. That's very good to see. If we turn to the following slide, I will now a little bit give you some taste and feel of what we've been showing at the major global fairs. If we take one of them, we were at the world's biggest juvenile fair, Kind + Jugend in Germany in the quarter. At Kind + Jugend, we really, for the first time, presented ourselves as a serious contender in the wider stroller segment.
Not only did we update our very successful sport and jogging stroller, Thule Urban Glide, to a new generation, Thule Urban Glide 2, with a number of new feature improvements and design improvements on an already award-winning stroller. We also presented to the market for the first time our Thule Sleek, a truly city stroller for the family that wants to have the flexibility to have a second child added. With a very small footprint, this stroller can then later on be transformed into a stroller for two children with a bassinet and a seat or even two sibling seats. For us, that means an entry into the much bigger stroller market than the jogging stroller market is. We are doing at the same time with the update of Thule Urban Glide 2, also a more approach of a stroller that fits everybody, not just a jogging stroller.
Generally, we are meeting many more consumers via these new strollers. The Thule Urban Glide 2 will hit the market in the spring, and the Thule Sleek will hit the market in the autumn of 2018. Very positive feedback, very exciting new products. The Thule Sleek will be also a product that we will assemble in our new Polish plant that I just mentioned. That's one of the new production lines that go in there. If we move into sport and cargo carrier products, we were at the world's biggest bike fair, Eurobike, and at Eurobike, we presented loads of products, actually. I will only mention two of the most key one. One was the Thule VeloSpace XT. It is actually, in my opinion, the best bike carrier in the world for heavy bikes sitting at the back of your tow bar on your car.
The Thule VeloSpace not only can carry heavy bikes, it's very easy to bring out to your car, attached to your car, and it's very easy to load the bikes. We could see the picture move forward, please. With that bike carrier, we also have the opportunity to actually place a small, flexible cargo box, and not only the bikes. You could actually combine it to bring in, for example, your golf bags or your strollers or something in a very nice cargo box that could be placed on the Thule VeloSpace XT. On top of that, we also introduced our most premium no-frame touch bike carrier for the roof mounting. Today there is a lot of new models of downhill mountain bikes and mountain bikes where it is actually difficult to grip around the frame.
With the carbon frames of modern bikes, a lot of people would like to avoid to grip around the frame. We have therefore developed a model called Thule UpRide, where you actually grip around the wheels only and lock the bike securely in position that way, and that new model was also introduced at the Eurobike. We go to the next slide, we show some images from the big fairs in the outdoor industry, which are the OutDoor, Outdoor Retailer, both in the U.S. and in Europe, and the image is from the European fair. At that fair, we show some of the new hiking packs. We have launched a new Thule AllTrail, which is a typical for the everyday person, not necessarily hiking for weeks up in the mountains. Maybe we could move ahead. Yes. Thank you.
We also introduced the Thule Vital, a series of bike hydration packs with some patented solutions of how you can make sure that the drinking hose isn't in the way when you're biking fast on easily accessible, but at the same time attaching to the bag. A lot of nice positive feedback and press around some of our new hiking packs. Moving forward to the next slide, we also participated at the world's biggest consumer fairs for consumer electronics. We were at the big European consumer electronics fair, IFA, in the period where we actually displayed both brands next to each other, both the Case Logic brand and the Thule brand for those type of bags.
Some of the things we launched, there was a lot of new bags actually, but some of them were some new day packs for the category of Thule, but also for some new bags in the family of the Case Logic. Continuously broadening our offer also in those categories to really make sure that we offer a wide assortment both for the business consumer as well as for a back-to-campus student. Finally, from a fair point of view, we were also at the world's biggest RV fair, the Caravan Salon in Cologne, in Germany. If you look at that, we feel that we have a really key advantage to our competitors. We are a true active company.
When we now see a trend with the RV consumers becoming younger, I think you might have already been briefed by, if you've listened into Dometic and others, that it was interesting to see at the Caravan Salon, we had almost 30% of the many few hundred thousand participants were actually first-timers. Age has gone down in who are coming to this fair. There is a younger generation interesting themselves in a much more movable, flexible way of doing RV, where you travel to a place, you go biking, you put the bikes back on, you go to another place, you go surfing, then you drive to the city, and you don't stay for weeks and weeks at a camping lot. For that type of consumer, we are so incredibly spot on with our brand.
At the fair, which you can see on the image, we showed one of our Thule Crew sponsored athletes, former world champion in free ride snowboarding, Aline Bock, and her fully kitted out van that she's been traveling around Europe with in the last six months. Where she showed her real life with all her accessories, all her gear, her mountain bikes, her snowboards and everything, and how practical all those new Thule products are in what we call the Thule van concept. We got a lot of press and follow-up because it is a true active consumer and we fit our brand beautifully there. We also had the Thule VeloSlide, a new bike carrier for what is called garage style. In the inside of the bigger RV, there is often opportunity to put bikes. Many times that has been dumping them just in.
We have an innovative patented solution where you can easily slide in and slide out to put your bike on it or your bikes, but you can also slide it away for those times you want to pack other things. So that garnered lots of positive attention at the fairs. Then finally, in terms of update, before I hand over to Lennart, we did have the Capital Markets Day. I hope you have had the chance to at least see the material that was highlighted there. We had a lot of participants, but the two main focus areas for you who were not there or didn't have the time yet to look at what we stated.
We talked about two things really, a new product category structure, which I've already been referring to in this call with Sport & Cargo Carriers, the Packs, Bags & Luggage, the Active with Kids and RV Products that we will on an annualized basis give you more details on, but also on a more anecdotal basis in the quarterly calls. Then we also updated our financial targets. We raised our ambition level on the long-term EBIT margin from 17% or greater to greater than 20%. So we feel with the tracking we are above 18% and with all the good initiatives that we are underway with, that on a mid to long term, a 20% target is the right target to aim for.
We also changed our leverage target to define it as being one and a half to two and a half times net debt to EBITDA versus previously around two and a half. Overall, we then also kept the two other targets of having an organic growth in constant currency every year of at least 5% and having a dividend policy of at least 50% of the net profit. So a lot of good things, a lot of exciting things, mostly maybe for the future. We've repeated many times that we are not a company that runs our business on a quarterly basis, even though we report to you on a quarterly basis. We do run it on the long term, and I'm very happy how that long term is both performing and is looking going forward.
With that, I'll leave it to Lennart to walk you through some of the more financial slides. Over to you, Lennart.
Thank you very much, Magnus. If we look at slide 12, the income statement, I will shortly comment on some of the figures that Magnus hasn't yet mentioned. We look at the gross margin. In this quarter, it was 41.1% versus prior year, 41.8%. Year-to-date, we are at 41.5% versus prior year, 42.1%. Both Q3 and year-to-date decline is due to slightly unfavorable currency development, the major remaining part is explained by small increase in raw material prices. If we look at the financial net, it continued to be low, with minus SEK 14 million in this quarter versus minus SEK 10 million last year's quarter. Of course, there is SEK 4 million difference, but that's linked to the negative currency effects on loans and cash equivalents. That is the reason for that this year.
If we look at effective tax rates, we were at 24% this year's Q3 versus 22% last year, if I exclude the German one-off tax payment we did last year in Q3 of SEK 20 million. Year-to-date, our tax rate is 24.4%, well in line with our guidance of 22%-25%. If we turn to slide 13, where we show the operating working capital and operational cash flow, we continue to have a very good cash conversion. End of Q3 this year, we ended with approximately SEK 1 billion in operating working capital, which is 16.7% of last 12 months of sales. A slight increase in absolute number versus prior year. That is a percentage and improvement. Good to see is that inventory is on the same level as prior year.
We've maintained good delivery performance from our factories and distribution centers in spite of increased sales. Overall, if you look at the operational cash flow, the combination of good control of the working capital and a good overall financial performance has been driven once again to a very good quarter. This is third quarter, we had an operational cash flow of SEK 558 million. That is SEK 74 million higher than prior year. Year-to-date, we are having a CapEx of SEK 115 million. That is SEK 50 million more than last year, but mainly driven by the building of our second assembly plant in Poland, Magnus just mentioned. With that, I'll hand over to you again, Magnus.
Thank you, Lennart. If we summarize our performance versus the newly updated financial target for how we're tracking year-to-date, we are well ahead on our constant currency net sales growth with a very strong performance excluding acquisitions, the Yepp acquisition we did in 2016 mid-year. If we exclude that, it's still a 9.3% growth. If you look at how we are tracking to our long-term underlying EBIT margin target of above 20%, we are on a rolling 12 months basis at 18.2%. I feel very good in how we have performed in a rolling 12 month basis this year and continue to perform this quarter and feel good that we are definitely driving towards the long-term target. If you look at our leverage target, we are at the moment at 1.5 times, in line with our structured long-term target.
As you know, since also the second payment has been done on our dividends, we have this year had an ordinary net dividend of SEK 3.40 per share. We had an additional extraordinary dividend of another SEK 7.50 per share in May. Overall, performing well to the targets. We conclude by looking at what is this team and what are all the people in the Thule family doing at the moment? Looking at Q4, it is of course, although being clearly the smallest quarter we have in the year, it is of course very important that we continue to drive growth as we've been successfully doing now for a long period of time.
What is the difference with quarter four versus other quarters is it's the quarter where we have the biggest exposure to Packs, Bags & Luggage, which despite growing in Q3, as I said, is still for the full year, the slowest-growing of our categories. Realistically, we have a proportionally bigger part of the least performing category in Q4. We feel good about still a strong performance. The second big thing, of course, is to make sure that we are pumping out all the things and preparing for the years to come, specifically for 2018 launch program. Both from a sales and marketing as well as the final touches in final steps of preparing mass production and actually also for some of the products starting to step into mass production for this key of making successful rolling into the Q1, Q2 period.
We are really pushing hard in all of those aspects. We have a lot of new interesting products. I've already mentioned them. I'm not going to repeat it. It will be now key, of course, to getting all of those ready in our various assembly plants and distribution centers for the coming 2018 season. We are continuing to spend more money than ever. We will continue to do that also in the coming three quarters in enabling that long-term growth entry into new categories while continuing to spend very much money also to drive growth in the traditional categories.
Luckily, we are capable, thanks to all the good work we have driven in other parts of our cost structures, distribution center setups, efficient back-end, to still deliver a strong EBIT performance as we go on. We will spend more money than in the recent years in product development. Really, it's also of course key that we do get the other big strategic initiatives that we are looking for the future. Although having been opening the plant in Piła, Poland before time, we now need to make sure all the ramp-up works well ahead of the season. We continue to have a number of key initiatives as we are trying to open up opportunities in new luggage and juvenile retail, with launches coming for next year. Overall, we're very excited.
As I said, I'm very happy with the performance of the quarter three and with the positive general trends that we have as a company, I feel very comfortable about the coming months and quarters, although they will be extremely busy. With that, I leave it up to questions and leave it over to the operator.
Thank you, Magnus. To ask the question today, please press star one on your telephone keypad. To remove yourself from the queue, press star two, and please check you're not muted locally. As a reminder, star one to ask the question. Your first question today comes from Stellan Hellström of Nordea. Your line is open. Please go ahead.
Thank you. First, I'd like to ask about your new product launches for next year. If you can give some quantitative or qualitative comment on your view on which could be the largest sellers in the next years.
I'll start with the qualitative part of it. It is clearly the case as we are the undisputed global number one in Sport & Cargo Carriers and have an immediate access to stores in 140 countries, when we launch a key new product in that category, it always will drive significant volumes very fast if it's a successful product. The bike carriers I just mentioned will surely be key contributors in terms of growth because bike is our single biggest category within Sport & Cargo Carriers. If you look at within the Active with Kids category, we have one key launch, which is the upgraded Thule Urban Glide 2 in the spring, and then an even more important, not then for 2018's financial performance, but definitely for future growth in the coming years with the Thule Sleek, which comes in autumn.
Although Thule Sleek will have a relatively limited impact in 2018, it will have a very significant impact in the long run. From that sense, I would say those are, in two different ways, very key for volume-driving launches.
I had also a question on the sort of temporary step-up in product development here. Is that affecting you fully in the third quarter? Also if you can comment on the phasing here, given particularly maybe that the fourth quarter is a relatively small quarter.
I think fully is always to say a lot of what fully is. It will be more in quarter four, one, and two, because that's where we see a higher, and thereby by default, it will have a bigger impact on a lower sales quarter as quarter four in totality, just due to the simple fact of having less revenue. As a percentage, it will impact greater there. There was part of that impact in Q3, and there will be more in the coming quarters, and due to the size of sales in quarter four, a proportional bigger impact there.
Good. That's clear. On the development in the U.S. here, seems that you had, now for the first time in a long time, I guess, positive development in your bags and luggage categories. That means then that, I guess that there was a slowdown in Sport & Cargo Carriers. Is that only reflecting what you talked about in the specialty business or also some other weakness?
No, it's only a business that was moved from specialty, this specific sub-supply to a car manufacturer business where we have decided not to hunt for aggressive volume growth, but rather focus on good margins.
All right. Very good. Thanks.
Yeah.
Your next question comes from Niklas Fhärm of SEB. Nick, your line is open. Please go ahead.
Thank you, operator, and good morning. I would just be curious if you could give us some more detail on the actual organic like-to-like developments, which are, of course, quite extraordinary in a broader context. More specifically, it would be great if you could give us an idea of how that composes in terms of volumes and mix and price, please, the 8.5% reported. Also, given that we just learned that RV exposure is about 12% of the group overall exposure, certainly there's something else moving that number. If you give us some more flavor on pockets of demand, et cetera, it would be very appreciated, please.
Absolutely. If you look at it, the biggest driver of the 8.5 is the volume. There is no doubt that it's volume that is driving. If you look at the true price for like-for-like price, we have commented in the past for a number of years, and it actually applies also this year, that it is in Sport & Cargo Carriers where we have a true price for price like-for-like increase, which has been slightly above 1% for years, and it applies also currently. Majority of our other businesses, it is when you launch a small laptop backpack, you will launch it at a certain price, and then you will have it at that SEK 99 price for the length of that bag's life. There isn't a like-for-like increase price.
What you do is when you replace the bag, you might choose to do something different price-wise, but it's not a like-for-like price increase. Volume is the main driver, definitely for the growth with a limited set of price. If you take RV exposure, yes, it's clear that with 12% of our business being in RV, with the RV, and we are exposed to European market, since that's where we've targeted to sell. If you take the European market, it's growing around 15%. We can always debate, but it's close to 15, right? If you look at that, and we have, as we said, on the Capital Markets Day, outpaced that growth significantly. We're not talking with a few percent, with a lot. That has been, of course, for 2017, a key driver.
As we look forward, we highlighted at the Capital Markets Day, I think it's only fair to say that seems to be an unlikely growth to continue year-over-year, every single year, with 15% from a market point of view. However, it does look, I think, quite solid for the beginning of a market that rarely dies very suddenly. If you look at the first few quarters in the beginning of the year, personally, I don't think we'll grow 15% in the market, I do think it will be showing nice growth also in the beginning of the year.
Then it's more speculative if you really go into late 2018, early 2019 on, it's a very speculative thing to say, and we actually prefer not to speculate, which is why we at the Capital Markets Day said, "Whatever happens in the market, if it grows, we'll beat that. If it declines, we will decline less." It is clearly a question mark that should be posed on how much financial situation could potentially pamper or temper a little bit with the RV market. Beginning of 2018, I think it still looks quite good. Maybe not as strong as 2017, it looks promising.
Sorry. Thank you so much for that answer. Still, certainly, there's got to be other main drivers behind the organic 8.5% growth rate then. Even if you're outperforming, I'm suggesting, the RV market, it's still a limited part of your overall business.
That's a very good part. Yeah.
Yeah. Could you give us some more flavor?
Yeah. The majority of the growth, if you look at it, is that we are outperforming the market in Sport & Cargo Carriers, and we are, of course, very aggressively, as we said at the Capital Markets Day, growing as a newcomer into what we call Active with Kids. If we didn't sell many strollers in the past and you grow at above 40% rates, that's going to contribute a lot. It is a pure volume growth in the sense that we're selling things that we didn't sell before. You could also claim that it's mixed, but I wouldn't call that mixed. It's a volume growth in a category where we've added a lot of products where we didn't used to have. Volume growth across the categories is the key driver, definitely.
Sorry to dwell on this, okay, that makes a lot of sense. Sports and cargo business is doing extremely well, of course. To what extent would you link that to the new car registration markets across Europe and potentially elsewhere?
I would link it zero to that. The reason I'm saying that is we, of course, track all car registrations in all countries around the world for years and years. What really happens is you do not see. Unfortunately, I would love to say that you see in those markets where loads of people are buying cars, that it helps us a lot. It doesn't. The other way around, it doesn't hurt us that much when people don't buy that many cars either. What drives us is, of course, like most consumer brands companies, a general economy field. If the general economy is strong, people dare to do more things. They buy a new bike, they go kayaking, they go more vacations. That makes our product easier to sell. A good economy, which is often then associated with a lot of car buys.
Let's be clear about that. When you look at car trends, you can say that that's often driven by a relatively strong economy, and hence, we will do quite well there. It's not connected to the car, really. You buy our products in Sport & Cargo Carriers because you want to do an interesting journey. You want to bring your families. You got another kid. You didn't have space enough when you got the dog to have your stuff in the back, you need a roof box on the roof. There are many other reasons.
Final question, then maybe I can come back. Could you give us some idea here of the potential hedging and impact of increasing raw material costs, please, going forward?
If we split it, I'll let Lennart talk about more about the hedging. If you take increasing raw material costs, as we said, we underestimated when we came into 2017. Some of the raw material price development. We weren't the only manufacturing company, that has meant that we have partially been hurt a little bit during the year on that. We've been able to compensate a lot other efficiencies. We have, of course, considered those material developments and what we speculate the material cost developments will be going into 2018, which we do not speculate that will grow up a lot. When you say rising, it was more that 2017 was rising. We've taken into our speculations in our pricing module for the Sport & Cargo Carriers products, which are the most exposed to raw materials like aluminum and plastic.
There is a natural hedging we do in our business by what currencies we sell in and which countries and which currencies we buy our raw materials, if that was what you meant with hedging, that's the case. If you talk more about financial hedging, I can let Lennart answer. Otherwise, we do work a lot, which is also why the currency really that we're exposed to is the euro because the U.S. dollar, where we have a lot of sales, we are also naturally hedged to a lot of purchases of raw materials in U.S. dollars.
Thanks. One small question. Last year you had about 4.5%, 4.6% of sales in R&D costs. You were talking a little bit about that in today's results. What will be your key expectation for next year in 2019? Do you expect to maintain that level or should we put in an increase or a decrease in our forecast models, please?
As we told everybody on the Capital Markets Day, I just mentioned it also to Stellan, you should put in an increase in 2019. We will go beyond five in 2018, sorry, in 2018. Our expectation is that when we come back to 2019 and 2020, we will continue to spend a lot of money, but some of the categories, strollers and luggage, are starting then by that time to generate so much revenue as well that even if we keep on spending money on developing new strollers and new luggage, we are having a matching revenue growth that will mean that we are going to be around five from that point onwards. Might be slightly below five or slightly above.
It's really a 6 to 9-month push now where we are spending on all the existing big categories, but also spending on categories that are relatively small but spending a lot of money.
All right. Thank you so much for taking all these questions.
Your next question comes from Peter Reilly of Jefferies. Peter, your line is open. Please go ahead.
Well, good morning. I'm going to start with three, please. Firstly, the new Sleek stroller which is coming out. I'm slightly surprised that it's not coming out till quite late in 2018. Maybe you could talk about why there's such a long period between the launch and the product going on sale and whether that's related to the ramp-up of the new Polish assembly plant which you said was ahead of schedule. Secondly, in Active with Kids, you talked about growth in all categories. If my memory is correct, earlier this year you were saying the fastest growth was in the child trailer business. It sounds like the other businesses are now accelerating and maybe it's not just a trailer story, maybe you could talk about that.
Lastly, coming back to this issue of product development and costs, I think we all understand you've got a bit of a bulge coming in terms of your launch costs and your development costs over the next six to nine months. It's maybe a slightly unfair question, but if you look at the overall margin for the group in 2018, can you still make progress next year or is next year more a sort of consolidation year where you're focusing on growth, getting the new products to market, and really the margin trajectory is more a 2019 plus story?
Three very good questions actually, Peter. Let's take the first one. When you're a new player in a category, and although we have a fantastically successful jogging stroller which has won a lot of awards, it's a niche product in the stroller category. Some of those strollers are actually today sold in more of an outdoor sporty store than necessarily in a traditional juvenile store. When you as a new player, which we still are a little bit in the stroller category, want to show a product, you do need to create attention with all the Mothercares, all the BabyOnes, all the buybuy BABY, all of those players as being a serious contender. There is one fair every year in the world where you get that opportunity to excite people. That fair takes place in Q3 every year in Germany.
We knew all along that not due so much to the factor, but just making sure this is the most complex type of stroller you can build. You have sibling seats you need to click in, car seats you can have, bassinet seats. There is many things. Lots of things to do, and we only want to develop great products. We knew that we were going to launch it in the second half of 2018. We had an issue. If we didn't show it in the autumn of 2017, we would have to try to get the attention of all these big juvenile retailers separately. Now we got that fantastic opportunity to get them excited early on and the meetings are already booked, let's put it like this, in the spring for showing something that hits the autumn. I actually do agree with you.
In a normal world, we would have wanted to wait to show it until the spring because that was when it was closer to hitting the market. Due to this opportunity of getting everybody excited early on, it is not uncommon, even for a very proven brand in this category to show a stroller. UPPAbaby, one of the big brands, did that last year. They showed the stroller at the Kind + Jugend, and it hit the market in August. It's not only us, it's quite driven by getting the chance to expose to big retailers. The second point is, yes, you're right. The multisport bike trailers had a fantastic growth in the beginning of the year and still continued in Q3, partly thanks to a fantastic launch. We replaced the world's best product with an even better one.
In the other two categories, we had products already in the marketplace, and we came with some additional models. If you take the child bike seats, we added the very interesting Thule Yepp Nexxt ones. There, we are performing really well as well, but we had a less of a hit of replacing everything, which we did in the multisport. Strong growth in child bike seats as well. Finally, in strollers, we didn't really have any new stroller in the market. It was the same Thule Urban Glide we had the year before. Despite having exactly the same product, we showed very nice growth. High growth, definitely not so far behind, actually, the multisport. We are now replacing that model to an updated Thule Urban Glide for next year.
The reason all three subsets within Active Kids doing really well, but multisport doing a little bit better. That's the summary on the second question. If you take the third one, yeah, I can't give you too much guidance, but you're all very smart question, let's put it like that. It's really the case that we run this company. We said it, we've been around for 75 years. We run it for the long term win, and if we would want to run it for a quarterly performance, we would need to spread out things. At certain times, you don't want to do that.
You want to push hard, the year where you will have a very significant push on becoming big in the future in some new categories, but yet have relatively limited sales in those categories, that's going to be a tougher year in terms of getting a significant pickup on margin. We don't really focus that much on margin. It was one of the debates we had as a senior management team in terms of why should we put the margin target so much as a target, because in the end, what is really interesting is how many millions of SEK of true EBIT falls down on the bottom line. I feel good about the EBIT falling down also in 2018. You are right that we see maybe bigger opportunities for EBIT margin enhancement in the years after this push.
That's great. That's very informative. If I can just come back on the issue of channel access, as you said, you need to be present in channels where you've historically been absent or underrepresented. What's your feedback been from these new channels with the Sleek and the other new products? Do you feel you're getting really good traction? I know it's a low-quality comment, but I sit here in London and none of your products are available in John Lewis, which is where most middle-class people go to buy their strollers in London. Is that the sort of account you're targeting?
Yeah, it would be. You're right. I think there is a good reason why we don't have any strollers in John Lewis yet, because we only have a jogging stroller, and that doesn't fit John Lewis. To have any chance to be in a John Lewis, we needed a stroller type, the Thule Sleek. Reality is this, we have to be very honest internally, that applies in the same way to luggage. You need to be in certain department stores. You want to be in certain places, we have to be very honest as a senior management team to ourselves and to you as analysts and to our investors.
In a Sport and Cargo Carrier category where we are the undisputed global number one, we are number one in all the 140 countries in the world, we are never worried of getting a product listed. In a category where we are the newcomer and there's many other strong players, we will see a more different picture of success. Maybe out of 140 countries, we will have great listings in 50, okay listings in 50, and pretty dissatisfying listings in 40 in the first few years. You have to build on it. Therefore, what we will be seeing realistically is a more scattered part of success. I would be too bullish if I said I think we will get the Thule Sleek into every great store in every country, all the 140. I don't think we will.
I feel very good after having had the fairs and talking to some of the most important retailers from around the world that in a number of them, we will have it. It will be a more spotty success, I'm sure. It is such a fantastic opportunity due to the size of these categories and that we haven't done anything in them. Even a spotty success is going to be a great, interesting potential.
That's great. Thank you.
We also have a follow-up question from Niklas Fhärm of SEB.
Yes. Thank you, operator. I was just wondering, given the quite substantial consumer shift from retail to online and in particular, the success of Amazon and the likes recently and most likely expected going forward, could you give us an idea of your pricing power and discussions with your wholesale customers or retailers in the end, please?
Yeah. First of all, we don't really have many wholesale customers at all. If you look at it from a classical, that's a little bit of semantics and wording, right? If you look at it, we have in smaller markets around the world, a distributor who becomes a wholesaler as well. They have a bigger global distribution responsibility. If you look in most markets, we are forward-integrated, sell directly to retail. If that retailer is happening to be pure brick and mortar or a combined omnichannel player or a pure e-tailer, we will sell directly to them. I think the fact is of pricing power is a little bit of a myth, I think, generally with e-tailers. Amazon is a player that is incredibly strong and very successful and puts a lot of pressure on their brands.
They do like brands, the pressure they put is not on pricing as much on making sure that you deliver the thing exactly when you said that you should, that you make sure that they get A+ Content that they don't need to spend money on to put on their homepage, that you can do drop-ship for them, that you take care of all the data and input and questions and anything, they don't have to do so much. They become their more a shop window. As long as you do that, which does cost some money, if you're not efficient in doing it does hit your profitability, it's not due to pricing. They're accepting normal pricing as everybody else.
Thank you so much. Could I also ask some nitty-gritty questions on the financials, please? Just noted that netting cash from discontinued operations reported after nine months this year includes a capital gain. I was just wondering, you were previously talking about a cap gain of the equivalent of SEK 70-ish million. Will you be actually including that number or anything else in Q4, or has that already been taken or reported as of nine months this year, please?
This is actually reported after nine months, it was approximately the same figure as after the closing in Q2. The only thing that will happen is potential small movement. When you do a transaction like this, you always have a time lag between doing all the reporting, capital, final adjustments, and things like that. That's the only thing that will move. This is the big bulk of it will be pretty much these numbers also in Q4.
Okay. Sorry if I'm being dense, what you're saying is that by now you have pretty much reported all the items pertaining to the discontinued operations. Is that what you're saying?
Yes.
Okay. What happened to the SEK 70-ish million? Why is it SEK 22?
I'm sorry, why is it?
I think what you're asking is the clarity, I think it was actually highlighted in our presentation on page 12, is when you talk about the 70-ish around, you're talking about the expected generated effect of the toolbox business. Then we've also separately reported that there was a potential earn-out clause for our snow chain business, and that earn-out clause did not take effect in 2017. The 70-ish has always been associated with the pickup truck toolbox business, and that amount is the same as it was assumed to be. The difference is that there was unfortunately not very great snowfalls, also the second year of the potential earn-out clause for the snow chain business, and that's the second effect.
All right.
Page 12 presentation is in the quarter report.
All right. Thanks again.
We have another follow-up question from Peter Reilly of Jefferies.
Good morning. Actually, I've got two small follow-ups, if you don't mind. Firstly, on Everyday bags, very good to see performance stabilizing and turning, I guess, slightly positive. Can you talk a bit about what's happening inside that category? Is that the new Thule product selling well, Case Logic still struggling, or do you feel you found a bottom with both brands and now we can hopefully get a slightly more positive performance going forward, notwithstanding the ongoing drag from some of the legacy business? Then secondly, on cash flow, which was better than I expected, I'm wondering whether the working capital numbers are clean or whether last year that includes the discontinued operations. Are there any issues we should worry about in terms of product availability or inventories maybe being slightly lower than you would like?
On a related note, where do we go with CapEx next year? I guess you've still got quite a lot of money being spent for the plant in Piła, so I guess CapEx next year stays probably about the current year's level.
I can take the cash flow question. It is what you see on this presentation that is clean, so to say, from the discontinued businesses. It's like for like for format on ongoing. No, we don't see any issues with selling the cash flow, meaning affecting our capabilities of serving our customers in any way. That we don't have any worries about. Secondly, the CapEx, we have said that we are supposed to be around 2%-3% of our net sales in CapEx, and I think that's the relevant guidance also going forward in between that range.
To add to Lennart's comments on what we have to remind ourselves of is that we were doing both in 2015 at the end of the year, ahead of opening up a new distribution center structure in Europe, then in 2016, at the end of the year, ahead of our 2017 opening up of a new North American distribution structure. As we highlighted at those times towards the end of the year, that we chose in those years to not jeopardize top-line growth by trying to be smart about having too little on stock, because you could potentially always have some issues when opening up new distribution centers. Both years, this went actually very smooth.
We have the opportunity also then in a comparative basis, go into proven smooth operating distribution centers where we don't need to have a little bit of safeguard as we did have in the end of Q3, Q4 in 2016 and in 2015, actually. We feel very good about our capability of delivering on time, in full, and having the right stock on hand.
Then if I take your bags, everyday bag question, yes, you're right. That is our view. We have to be honest and say this is a highly competitive business. We know it, but it seems like we now have found a better balance in both brands in the typical little backpack, little bag you have to go back and forth to school and back to work, where both brands actually have shown better performance now as we've been working on it. Our hope is that the combination of these everyday bags doing better and then entry into luggage will need to and should be able to more than offset the decline in some of those very old legacy and OE type of bags business we still have.
That's great. Thank you.
Magnus, that was the last question. I'll hand back to you.
I want to say thank you for listening in and following up on a very good quarter three, and look forward to talking to you again when we conclude 2017. Thank you very much.