Hello everyone, and thank you for joining the Thule Group Investor Meeting, January 2025. My name is Becky, and I'll be your operator today. During the presentation, you can register a question by pressing star followed by one on your keypad. If you change your mind, please press star followed by two. I will now hand over to your host, Mattias Ankarberg, to begin. Please go ahead.
Thank you so much, and welcome everybody to this call. I am here today also together with Toby Lawton, our CFO, who will be available for questions as well, and welcome to this call. We have had a few investor meetings in the recent period, also after the announcement of the acquisition of Quad Lock during Q4, and we wanted to. There are materials available from those meetings on our website, and so will this meeting be afterwards. If you have been participating in some of those meetings, there is a risk you may find this a little boring or repetitive because we are basically sharing the same information. We wanted to make sure to have this opportunity to share the same information and provide you with an opportunity to ask questions. I will speak to the presentation available in the webcast and also available on our website afterwards.
So I'll cover a few topics today: where we are as a company right now and where the market is at. I'll talk about our strategy going forward and how the acquisition of Quad Lock fits with that strategy. And I will also share some news around how we see the product news coming in 2025. Starting with the 2024 situation, where is Thule at, and where is the market at as we are in the period of wrapping up 2024 and moving towards 2025? A couple of points. First of all, we came into 2024 with a very high activity level, a very intense agenda of trying to get back to sales growth, profitable sales growth after two years of sales decline following the COVID peak. And we have completed the most intense product launch year ever in Thule history, so the most number of products ever launched.
We have launched not just one, but two new product categories: dog transportation and car seats. We are trying to move closer to our consumers and interact more with them directly, and as part of that has opened five new markets for D2C on thule.com. We've also continued to work on our supply chain efficiency and specifically our inventory levels to further reduce that and generate cash, and as we are about to wrap up the year, we are pleased to see that some of these results, some of these actions have given good results throughout the year, and we have importantly been receiving a record number of international design awards and actually product and consumer, excuse me, product and consumer tests during 2024, so I used to say before this year that Thule has received 27 Red Dot and eight design awards. After 2024, we have received 23 more.
We won the ADAC product test for car seats, the first with the first product launched in October. And we are very proud of our design team who was awarded the Red Dot Design Team of the Year in 2024. So nice to see that recognition. Before I get to the financial parts, what has been the environment that we have been operating in doing all these activities? Well, we've talked for several quarters this year that we've been in a tough consumer market generally with cautious both retailers and consumers. And that trend has been held fairly constant for the first three quarters of the year. We have, however, seen some brighter spots and some tougher spots around those trends.
So as we've talked about before, for those of you who follow us, we have seen good strength in Europe with consumer and retailers being more healthy than in North America where the landscape has been tougher. We have seen the bike market, or at least the premium end of the bike market where we operate in, to have destocked nicely and come back to growth in particularly Europe. And we have seen a really tough time in the RV industry, particularly in the OE channel in the third quarter. And that has been the toughest spot in our footprint in terms of market exposure for the last period of time. What has been nice to see even in this tough market climate is that new Thule products continue to drive sales growth even though the market is tough. So that's the first three quarters of the year.
It's a bit of a repetition for what's been going on before. Typically, when we are now talking about Q4 at this point of time, we typically say that it's the smallest quarter of the year from a sales perspective due to seasonality reasons. And much of the quarter is about preparing for the next year. This year, however, Q4 has been very intense for us. It's still true that it is the seasonally smallest quarter. And the trends that we have been seeing throughout the year, we've commented before that trends don't change overnight with Thule Group. And we had expected them to continue in the fourth quarter as well. However, as you may know, if you follow us more closely, you know that the business mix is a bit different in Q4. Bike, which I spoke of, has been a strength.
It's not the big sales exposure in Q4 because it's winter. However, RV and particularly OE has a higher share of sales. And therefore, just mathematically, the pluses are lower weight and the minuses are a higher weight, so to speak, when it comes to the sales trends. The second point regarding Q4 is that we have had a big launch of car seats. We were very happy and proud to win the ADAC consumer test in October. And we have been using this opportunity to really roll out with force and strength whatever we can, car seats across over 20 European countries now in November. So it's been an intense period for getting that product out in a lot of different markets, which we think is exactly the right thing to do when we have the momentum and the opportunity.
Then the third point, which is also an important and intense event in the first quarter, is the acquisition of Quad Lock, which was announced in November and closed as of December. A seasonally small quarter, but a quarter with lots of activities for us this year. Turning to page four, what has the activities in 2024 and the market situation in combination meant for our financials? We haven't reported Q4 yet, but on this graph, you can see the long-term trend since the IPO and the last 12 months to the rightmost side. The bar is the sales and the green line is the EBIT. It's nice to see that after two years of post-COVID peak decline, we are now back to sales growth and back to profitable growth.
And the year so far, organic growth is up just over 4%, and EBIT margin is up close to a percentage point. So that's the update on where we are in 2024 in terms of activities and market situation. The other interesting thing to observe on this graph on page four, the long-term trends, is that there is a good long-term trend that we are now back to. And another important aspect of our work in 2024 has been to ask ourselves why that is. What is it that we should continue to build on as we look to the coming period and look to achieve our targets for 2030, excuse me, and even beyond? And I'd like to share some of that, those insights and learnings, because that plays into the reasons behind acquiring Quad Lock.
So if we turn to page five, in summary, an important insight is that Thule's value creation is really driven by market-leading positions. And more specifically, our ability to innovate and out-innovate competition in pockets or niches where we are market leaders. So if we look at some facts, we look at the financial value creation in terms of sales growth or gross profit growth the last 10 years or since the IPO 2014, a few, about a handful of product categories account for 90% of that growth, which is, of course, a big share with a few product categories. And interestingly enough, we also have really been able to, throughout our own abilities and product development skills, to innovate in these categories and really drive the market and premiumization of those product categories, thereby developing the category and our own market share at the same time.
Another interesting observation, I think, is that these categories or this model has proven to work both with product categories that we've had for quite some time, like rooftop boxes on the picture. We've been the global market leader since the 1960s, and it's still a category that is creating lots of good value for us. But we've also been able to apply this to acquired market positions. So when Thule has acquired a company, integrated it into the Thule brand and the Thule way of working, we have been able to see some of the same effects for example, the running stroller company Chariot, which is now Thule Chariot, or other acquisitions that we have done, rooftop tents, etc. So then we can ask ourselves, is that model applicable to any product category? And the answer is no.
If we go to the next page on page six, we clearly see that there are some characteristics of product categories that fit better with us and our strengths, our skill set, if you like. And in summary, there are four. First of all, the product category should be a good fit with Thule brand. And if you ask consumers about what the Thule brand is about, it's about enabling an active life outdoors. It's about having a quality product that is appreciated by an enthusiast consumer. The category should have some tailwind, ideally good growth, but also a customer which is willing to pay for the best possible product. We like when there are some barriers to entry. So where there are some regulatory requirements or some technology platforms or intellectual property or high complexity category, that's not that easy to get into. That's typically good for us.
We used to say internally that the more difficult it is, the better for Thule, which is partly true. And lastly, we like to get paid from innovation. So we like to get leverage from our ability to innovate, create a better product, drive premium, and drive growth. So when we see that that is in place, that's working really, really well for us. And based on these insights, we have clarified on page seven the strategic direction that we have. It's basically scaling up what we already do well at Thule. We call it that we aim to be big in pockets or in product niches. And of course, we still want to be a premium outdoor Thule branded business. So these pockets should be united by the Thule brand, we call it.
That means that we will focus increasingly on the categories and allocate resources and efforts where we can be, where we are or can become market leaders in an attractive product category that fits the bill we've just described. We will continue to focus on product development and innovation to extend these positions and use these strengths that we have. We will, when the right time comes, then we find opportunities that meet these criteria, look at growing faster by acquiring a position. And we will continue to build on the Thule brand and the Thule culture that we have, which unites all of these product positions and the work we do in a nice way. And to start acting on this strategy, we acquired Quad Lock. And there is a separate presentation available on our website and a webcast that is from mid-November that lays this out in more detail.
In summary, on page eight, Quad Lock fits this strategy really well. It is the global market leader in what's called performance phone mounts or performance mounts. More specifically, Quad Lock is the market leader in performance mounts both for bicycles, motorbikes, and for off-road cars. It is an attractive category that's growing around 10% per year. It is a company which is also built or founded on innovation. One of the pioneers in this field started out in biking and developed a much broader product range and moved into new use cases or subcategories and has proven to be able to win the consumer well in these use cases listed on the page, but also emerging positions in others. So clearly, the innovation leader in the industry, which has created some barriers to entry with a much larger presence than anybody else, some IP and etc.
It's a very nice fit with the criteria we talk about. It turns about SEK 1.4 billion, good profit margins at 25% EBITDA, and is today a global company with sales in over 100 countries and with a fairly even geographical split that is probably visible from the little pie chart at the bottom right. The other point I wanted to make before we open up for questions is a few words about how we see 2025. We, excuse me, sip of water, continue to execute our long-term strategy, of course, and we continue to drive the points that we described earlier with product development in our existing categories, build up the new product categories, and move closer to the consumer, etc. I think it's worth reflecting on the activity level given that we had such an increase into 2024.
If it's something we learned from 2024, it's that new Thule products drive growth even when the market is tough. Therefore, we have decided to keep our foot on the gas also for 2025 to maintain a very high activity level. At the Q4 call, we can get into more details across different sets of priorities. When it regards the launch calendar, we are continuing launching products at about the same high pace as in 2024. You will see more focus on innovation and new products in some of the categories where Thule has been around for a long time, upgrading bestsellers. You will see that in both the premium end, but also in mid-price or upper mid-price is maybe Thule's position.
You will also see, of course, us continuing to scale up new product categories that is dog transportation and car seats, also with more products to extend the portfolio in 2025. Just briefly, to give you a few examples, on page 10, we did in 2024 upgrade our best-selling rooftop box, the premium box Thule Motion. In 2025, we will upgrade our best-selling mid-price rooftop box Thule Force. It's a new design, better aerodynamics, a new look, more accessories, etc. Really looking forward to bringing that big volume product to the market in an upgraded version in just a couple of months. We will also upgrade a few of our most important bike carriers. On page 11, we will launch a new version of the biggest seller North America-specific bike carrier. We'll have a new design or aesthetics. It'll take a heavier bike load.
It will be available in both two, three, and also converted to a four-bike option and easier to use, include a lock, more accessories, etc. So we're really upgrading, excuse me, high-volume product for the North American market. On page 12, we will also update and create a new version of our most sold bike carrier, Thule EasyFold. We actually did a limited soft launch already at the end of 2024, and this product also gets really good updates, improved functionalities, improved load capacity, can be converted to a three and a four-bike as well. So it's another big volume product in the upper mid-price segment, which we're getting an upgrade in 2025. Besides bike carriers, we have several other things coming.
As just one example, Active with Kids & Dogs on page 13, one of our iconic products, Thule Glide, in our view, world's best running stroller, which has received numerous awards throughout the years, is getting a new version with better comfort for the child, new design, and several other improved functionalities. I'm really looking forward to that. And of course, we wouldn't be Thule unless we're driving some innovation. So just to mention one as we round off on page 14, the rear of car transportation has been an interesting and growing segment for many years, definitely in bike carriers and more recently also in boxes. And in 2025, we launch a product called Thule Vanto, which is able to carry both a bike and a cargo box on the same platform.
And it's also designed to be compatible with a lot of existing bike carriers already in the marketplace, Thule bike carriers, which we hope will be appreciated by some of the Thule consumers that already have a Thule bike carrier looking to add, at times, a cargo box for transportation. So a very intense year ahead in 2025 also, lots of preparations going on at the company and high energy levels, which is exactly what we would like it to be. With that, that concludes the presentation part of this call, and I open up for questions.
Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question is from Daniel Schmidt from Danske Bank.
Your line is now open. Please go ahead.
Yes, good morning, Mattias, and I hope you can hear me. A couple of questions from me. Mattias, you mentioned that the trends are the same and they don't change that quickly, but you also said that the mix, when it comes to the business mix, is a bit different in Q4 compared to Q3. Could you give us any sort of shed any light on how much the mix is shifting in Q4 when it comes to RV, OE, and when it comes to bike, which are two areas that you mentioned? Could you give us any percentage of what that normally is in Q4 versus Q3? As a percentage of sales?
Yeah, yeah. Hi, Daniel. Toby here. I could say, so with regards to RV, you can see that we report the sales of RV.
You can see that RV is generally smoother throughout the year. But on average, over the year, RV is 50% OE and 50% aftermarket. In Q4, by far the majority is normally OE. And it will be the majority this year as well. But it's OE, which is the part which is down a lot and was down also previously. But it's now, because it's the large part of RV sales, it has a much bigger impact on RV and also on the Thule Group, therefore. And you can say the OE part of RV is down close to 20%. That's the industry figures that you can see due to the production stops in a number of OE manufacturers. So that's the same trend we've had before, but it's obviously been more compensated before that we've had a bigger aftermarket within the RV part of the business.
But we've also, RV has been during quarter three, was a smaller part of Thule Group. Yeah.
And if you just look at that split when it comes to Q3, was that 50-50 between OE and aftermarket, and now it's more 75-25?
No, I won't say. I mean, I don't give exact figures, Daniel, but yeah, on average over the year and the previous quarters, other bigger quarters, it's 50-50 is where we normally are. And it's a long way from 50-50 in Q4.
Yeah, but am I getting you right that normally Q4 is big on OE and aftermarket is small, and then, of course, you have a big drop in OE that's impacting sort of the percentage of what it stands for? Am I getting it right?
Yeah, exactly.
So it's the mix between these different components that is going to impact the overall Thule Group growth rate negatively versus year-to-date Q3. We were at 4% growth for the Thule Group. The trends are the same because this RV mix impact is bigger, and that will have a negative impact on the Thule Group.
And just also the second part, bike-related, could you shed some light on what that historically as a percentage of sales is in Q4 and Q3 normally?
Mattias here. I don't think we've shared exact details, but I think we have said a few times that bike-related products are the biggest sort of activity exposure for Thule, if you like. And I think it's very similar to RV in the sense that the consumers buy the products when there is a season to buy the product.
So you would buy an RV when it's spring because you prepare for summer. You buy bike-related products mainly in spring. And then the season wears off depending on where you are and how warm it is where you live, etc., and how long you can bike. But typically, you may have decent sales in maybe the first part of Q4 if you live in Spain. But typically, as you move into Q4, it becomes a very small part. So we haven't shared specific numbers. But of course, that's also part of the reason why Q4 is so much smaller in sales in general, in total, sorry, I should say, than compared to the other quarters.
Yeah. Okay. That's fine. Just moving on then, you also want to highlight that you have had a very busy Q4, which you normally don't have really.
And part of that sort of is explained by the big launch of car seats in 20 new European markets by mid-November. And am I sort of hearing you right between the lines? Of course, it's entailing a cost, and then it will take some time to get the top line out of that. And is that what you are trying to communicate?
Well, we tried to describe what the activities are in the company, to be honest. But yes, of course, it comes with a cost to launch products. I mean, the product, just for everybody on the call's information, we did launch car seats at the end of May in three countries, Germany, Switzerland, and Austria. And we were really happy to have a good start and win this award. But the rest of the European rollout is coming now in November.
And so there's no new sort of product development cost or cost like that. But of course, each country needs to have fixtures in the stores and PR events and samples and ambassador programs. So yes, definitely, there are some costs. And I guess, Daniel, if that's what you're kind of asking, it's a small season quarter for us. Is it wise to take that cost in Q4? Doesn't the small Q4 look bad? Maybe that is the case. But we thought we won the ADAC test in October. This is definitely long-term the right opportunity to capitalize from that. We've had a lot of good early demand from lots of markets based on this award, of course. And it may be negative for the small quarter of Q4, but on a yearly basis, it doesn't really matter.
On the long-term trend, we think it's the right thing to do for the business. So that's what.
absolutely. And then just maybe, could you shed some light also on how to model Quad Lock? It's part of the group now since December. And maybe just for educational purposes, give some indication of how big December normally is and how have you come to learn the seasonality of Quad Lock when you look at the quarters to come? And sort of is that similar to Thule itself, or does it differ in any way?
I can give a bit of a flavor on that, Daniel. And before doing that, I can say that there will be some further supplemental information on the Quad Lock seasonality that we'll give in the Q4 report, which will come out at the beginning of February.
So you can be patient, and there'll be some more details coming out then. But to give a flavor for it, I can say December is not a big month, number one. December is one of the quietest months of the year for Quad Lock. But the seasonality generally is that Q2, Q3, and Q4 are pretty even and pretty strong quarters. And Q1 is the weak quarter for Quad Lock. So it's a bit of a different seasonality to Thule, where we have the strongest being quarter two and then probably quarter three soon after and then quarter one, with quarter four being the weakest quarter for Thule. So it will help our seasonality by evening out quarter four going forward. But December is weak. The quarter four sales come largely earlier because it's also driven by online sales, which are driven partly by Black Friday and the November sales trend.
It's unfortunately not December.
Okay. And in terms of sort of seasonality, in terms of profitability, is it sort of Q2 and Q3 normally that are the most profitable, and then the start of Q4, and then not December, and then a weak Q1? Is that the way to frame it?
Yeah. I would say it's not kind of dramatic differences in kind of profit margin, but it's true that where you have the high sales quarters, you get the most leverage on fixed costs, and therefore, you also get the better margins in those quarters. So yeah, you're correct. Yep.
And then just finally from me, it's been many questions here. But Mattias, you mentioned that you are entering 2025 with a quite sort of excessive agenda when it comes to product launches equal to 2024.
But if I remember correctly, you've also been trying to front-load the launch schedule a bit more versus last year. And I think you tried to do that last year as well, but it was more evened out. Do you think that you will be more successful with that front-loading this year?
Yeah, you're right, Daniel. That is part of the plan for 2025. We aim to get more products launched ahead of spring or summer season to capture more of the season, basically, in terms of sales. We had a plan to do some of that in 2024. And in 2025 as well. Most of that held true. Some of it was one or probably a few were maybe a little delayed, but some also shifted places due to, well, lots of reasons, but mainly supply chain constraints.
So I think we learned a lot in 2024 as an organization, if I should reflect on this. I mean, this was several X up in terms of how many products we launched in 2024 versus previous years. And we did manage to launch a lot and get a really good impact for it. But of course, there are things we also internally can do even better now that we've done that once. So we have done things a little differently in 2025, even more sort of front-loaded. But so far, we are on track to deliver that. And with all the deadlines and milestones that we monitor weekly are so far where they should be. Yeah. Okay.
Is Easter in any way sort of affecting these deadlines? Easter is a bit later this year.
And I think that's normally sort of the starting point of the outdoor season for many markets.
Yeah. No, you're right about that. That is, I didn't want to get very right. You are very on top of it, Daniel. I didn't want to check too much detail. But that is one factor. Chinese New Year is always another factor and how that plays out with a few different things. But trying to get if there is a good early spring, now we're talking details here. But then, of course, the outdoor season will probably start at or maybe even before Easter. And then it's really nice if you can have the most important products in store, of course, then. And that should be a little easier to do with Easter being a little bit later than earlier, so to speak.
Well caught. Okay. Thank you, guys.
That's all for me.
Thank you. Our next question is from Adela Dashian from Jefferies. Your line is now open. Please go ahead.
Thank you. And good afternoon, gentlemen. A question on the U.S. and the politics that's going on over there. Have you seen any impact yet of potential tariffs, especially with Chinese New Year that you just mentioned and how that is present this year? Have that at all resulted in maybe some customers deciding to be even earlier than usual in placing orders, etc., to, I guess, not defer any type of price increases due to potential tariffs? Have you seen that in Q4?
I would say, Adela, we haven't seen that, actually. So we haven't seen that people are placing orders earlier because they're trying to avoid potential tariffs.
But I could give a general comment around the kind of the tariff question generally is, of course, a hot topic right now, and it's quite unclear what the situation is going to be. But we should bear in mind, in Thule, the majority of our products sold in North America are manufactured in our two manufacturing sites as well that we have in North America, which manufacture both bike racks and bike products and roof boxes. And when we compare that to the competition in North America, nearly all the others are importing most of their products either from Asia or from Mexico. So we are in quite a different position to nearly all the competition in that respect that we're less exposed to tariffs. That doesn't mean you're completely unexposed, but we can manage it in a better way.
And then if you take the main kind of import flows, we produce some products in Europe, which we have as global products, which we import as the second biggest flow to North America. Those are things we can also look to adjust or to adapt going forward if there was a benefit to doing that and manufacturing more locally in North America. So we have things we can do. We do also have some much smaller products, which we do also import from parts of Asia, which are harder to move. But then I would say all the competition are in the same place on those products as well. So it's all things we need to kind of keep on top of and manage, which we are focused on. But yeah, until we know what the situation is, it's impossible to say what the position is.
But we're, in summary, much less exposed than our competition.
Got it. Thanks for that. And then going back to RV, could you speak on the dynamics between the OE and the aftermarket clientele? I mean, would it be fair to say that you have higher volume potential with OE, but lower profitability, or is there a different way to think about it?
I mean, I would say I think we don't go into kind of profitability by channel, but all our business is profitable, of course. But you can generally say the OE is a kind of manufacturer's manufacturing throughout the year. So that's when we sell to OEs throughout the year, whereas the aftermarket is really driven by consumers buying an RV from a dealer, and then they choose to put products on that RV. So that's driven more by the season.
So they're kind of different profiles in that way.
Okay. And then maybe lastly, if you're willing to answer any of the new launches next year, should we expect all of these to be margin increases? And also what your expectations are on price increases versus what you histor ically do, which is once or twice a year?
Yep. Mattias here. Yeah. So in general, when we launch new products in existing categories, we aim, of course, to be margin accretive, so to speak, to develop better products, but also to get paid for it. That most often is the case. I mean, it could happen that with raw material changes and whatnot, that's not always the case, but that's the ambition.
When we move into new segments or new product categories, there is not always the case that there is ramp-up to be done when we have own manufacturing set up that is not yet at scale, etc., so in general, we should get a positive mix effect from new products. That's the ambition. Regarding price increases, it's another good and important topic at this time of year, so I'm glad you bring that up. You're very right. Historically, the industry has operated on sort of an annual price cycle at January 1. We have had pricing increases for existing products for around 1-1.5% historically. It was a lot more during COVID. It was nothing last year. This year, we are back to sort of the previous routine of do increase prices as of January 1, 2025, with an average around close to 1.5%, so that's for existing products.
And then on top of that comes new products, which then typically will drive the average net sales price up. So back to, I don't want to say normal, but back to pre-COVID behavior in that sense.
Yeah. Great. That's all for me. Thank you.
Thank you. Our next question is from Mats Liss from Kepler Cheuvreux. Your line is now open. Please go ahead.
Yeah. Hi. Thank you for taking my question. Well, coming back to the car seat launches here in Europe, could you give some sort of indication there what the sales impact could be expected to be in 2025?
No, we don't give specific projections like that, of course. But I think we can say around car seats launch that we are very happy with the start. I mean, we should be probably couldn't have had a better start, to be honest.
Really nice reception with the premium retailers. Really nice winning the award. Seems to be a good reception now in the launch in Q4 in terms of a lot of retailers willing to take us in and give us really good floor space. But we have to be honest that commercially, we haven't really proven much yet. We have quite the way to go to make sure that this is a commercial success. We do have high ambitions, and we've talked about the sales potential of SEK one billion towards 2030. But that's, of course, with a broader portfolio and including a North America portfolio, a piece of that as well. So step by step, we will keep doing the job and making sure that initial success is getting into commercial success and take it from there.
Yeah. Another question regarding that.
I mean, it was some time ago when I was a consumer of car seats for children, so apologies for that. But do you have a full assortment there of car seats, or is it sort of in the pipeline there that you will launch additional similar products for all ages and that kind of opportunities going forward?
Yes. That's also an important question. So thank you for bringing that up. And we have a limited portfolio today. We have, first of all, product portfolios for the European markets, you could say, certain other countries that follow the same regulatory framework. We have launched an infant product for infants and a product for toddlers. And in 2025, we will also launch what's called a high-back booster seat, so a product for a bit older or bigger kids. And of course, more products to come.
But we have launched from sort of the most two important products from child is born, infant and the toddler, and then more to come.
Great. And then about, well, product launches also. I mean, you have a history of, well, posting some 5-6% of sales. And now, I guess, consensus on the. Well, we expect you to increase sales in 2025. Should we expect this 5-6% of sales to continue, or should we expect the product launch cost to be about unchanged in absolute terms?
I think you're right. We used to be around that 5-6% share of sales as product development costs. And the last two years, I think, we've been higher than that, particularly preparing for the car seats. And also because I think market situation hasn't been as favorable as previously, volumes are a bit lower.
We will keep the foot on the, I think, three things maybe. We will keep the foot on the gas when it comes to product development in terms of levels of activity and largely in levels of cost. We'll come back to more details as we come into the Q4 report and publish numbers for the 2024 year as well. But of course, we hope that this continues to give great effect with the actions we do, but that we are very confident in. But we also hope that sooner or later the market picks up and we do get some volume back and the percent sort of spend as part of sales, therefore, as a consequence of both those factors will decrease.
Now, the third element of this equation is also that we have acquired Quad Lock, which also is a company that changes sort of the metrics to the P&L structure a bit, but that we can get back to later on. But the basic message is we keep the activity level and the spend high, and we do expect to get leverage from this, both because of our own actions and when the market picks up and get therefore lower share of product development cost, a share of sales over time.
And finally, just to get the feel, I mean, the Quad Lock acquisition seemed to be quite a nice complement. But it also increased gearing somewhat. And looking at, could you give some sort of flavor regarding the dividend?
Well, if you have the target, of course, more than 75% of EPS or earnings per share, but it's been above that level historically. Should we expect any changes there ahead of the report or?
You're right that with the acquisition, we do have some more debt. We think it's still in a quite good level. But we can. And then the dividend question, we would have to leave to the Q4 report. It's also a board decision on what recommendation to give to the AGM, but that will have to follow when we do the Q4 report.
Okay. We have our financial target, which is explicit, but we don't expect.
That's good. That's what we were just saying. Exactly. The financial viewpoint also must, the financial targets remain the same, and the 75% on net income target is still there. So no change in that respect.
Perfect.
Our next question is from Carl Deijenberg from Carnegie. Your line is now open. Please go ahead.
Thank you very much. Hi, Mattias and Toby. So I just had one follow-up question from my side, and that's regarding the potential timeline of the launch of the child car seats in North America. If you could give us any update there or any potential month when that can happen in 2025 would be helpful.
Hi, Carl. Yeah, thank you for the question. It's a good one. We, unfortunately, cannot give you a more firm deadline. Well, I won't give you a more firm deadline right now. There is a project going on, as we've talked about. And for those of you who are not aware, there's been lots of regulatory changes that are in the works in North America, whi ch now seem to have landed.
So we can finalize some of the development projects. But what we have said earlier, Carl, is that we're not, it's going to be after 2025. So it's not in 2025. And then we will get back to the more firm plans as we feel it's the right time to share them.
And can I just ask also, I mean, you have this launch strategy in Europe here where you've gone gradually in the twin markets, obviously starting in the DACH region. Is that going to be on a similar, let's say, pathway in the markets outside Europe as well? Are there any other ones outside Europe that are closer to hand versus, for example, North America?
Yeah. No, it's a good observation.
I think that the markets we are able to launch this product in, the two products in right now, are the markets that adhere to the same regulatory framework as the European or EU countries do. And the reason why we launched it in fewer markets first is, well, there are a few reasons, but mainly that it takes time to ramp up production. And we really want to do this. We do manufacture these in-house, and we want to do this with quality and high level of control, of course. And we decided to launch in Germany for several reasons that we talked about previously. And then, of course, now in November, we have addressed the sort of next 20 most important markets, which covers a lot of the scope from a sort of sales perspective, I have to admit.
So there are a few countries left that we may or may not get into in the coming period, but the launches we have now done are for all sort of essential purposes, covering the sales footprint of these first products.
Okay. Very well. That was all for me. Thank you.
Thank you. Just as a reminder to ask a question, it is star followed by one. Our next question is from Fredrik Ivarsson from ABG. Your line is now open. Please go ahead.
Thank you, Operator. Good afternoon, gents. Two questions from my side. First, a follow-up on Mats's question on the product development cost. I think you guided for 600 in 2024, and that was level with the previous year. Is that a sort of decent number to aim for in 2025 as well? Just some rough guidance on that in absolute terms.
I can just say, sorry, we don't give guidance on development costs like that. What we said is 2023, which you saw in the annual report for 2023 as well, we had 7% of sales for development cost. We said that for 2024, it's on a similar level, and I'm talking in percentage. Then we don't give any guidance sort of forward-looking.
kay. I had to try. Second one on the Quad Lock acquisition, can you give us some guidance on the balance sheet items and especially on the asset side at this point?
Yeah. Quad Lock does not have own manufacturing. The products are sourced from external suppliers. So the balance sheet is mainly working capital. So that's really what nearly all you have on the operating side of the balance sheet is working capital.
Then I could say the working capital overall is at a similar kind of level in relation to sales that we have in the Thule Group. So it's a similar kind of profile to working capital to what we have in Thule.
Okay. And in terms of goodwill?
The balance sheet then is intangible assets, goodwill. And yeah, it's an accounting discussion now, but there are intangible assets which you identify in a purchase price allocation, which is mainly goodwill, but there may be some others which is kind of technology and things like that which are in the balance sheet as well. But they're all intangible assets, and there may be some amortization, but we have to come back on that. But it's all non-cash-related items.
Okay. Perfect. Thanks so much.
Thank you. We currently have no further questions, so I'll hand back to Mattias for closing remarks.
Thank you, everybody, for joining this call. I hope you have a great rest of the day and look forward to speaking to you again at the Q4 call. Thank you.
This concludes today's call. You may now disconnect your line.