Hello and welcome to today's Thule Group Year-End Report, Fourth Quarter, 2022. My name is Bailey, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions- and- answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad. I would now like to pass the conference over to Magnus Welander, CEO and President. Please go ahead when you're ready.
Thank you, Harry. Good morning, everybody. Time to wrap up a interesting 2022. I ask Harry to go to page 2, where we summarize a year that truly has had two very different faces. As you've been hearing from us throughout 2022, we had a phenomenal start to the year with a fantastic preseason for the bike market and a general very strong performance across Thule's categories. As we all remember, if we're listening in to this call, we had to issue a profit warning in September as the bike retail sector clearly had a big handbrake pull when they saw they had too much inventories on hand. If you look at 2022 Q4, we have also, as always, remember that it's challenged by the fact that we have a clear strong comp period.
When you have a strong comp period over one year, it's easy and, when you're a public company that you have a very short memory that it isn't as bad as it might look. Versus 2021, Q4 was weak on sales. We were 21% down currency adjusted. The biggest downside was the U.S. and Canadian business or Region Americas. That is also once again related to the strong 2021 Q4 that those markets had. As you remember, if you listened in to our 2021 Q4, we were still catching up with backlog deliveries of bike-related products well into the winter season in Region Americas while we had caught up earlier in Region Europe and Rest of World.
EBIT for the quarter, which is always our lowest EBIT quarter, was SEK 4 million. That meant that we just barely had a positive EBIT. We had a clearly stronger operating cash flow versus the same comparable period last year. Clearly here it was the fact that 2021 Q4, we were building up huge inventories for the season ahead. While now we did not need to do that, having high inventory levels already in 2022. When we summarize the full year, it is the second best year in the history of the Thule Group. Still doesn't mean we're happy with it because we had a 9.7% FX adjusted decline in our sales, and that's something you're never happy with. If you look at our performance by region for the full year, they were quite similar.
We were 9% down in Europe and the rest of the world and 11.5% in Region Americas. If we look at our performance on an EBIT, we did SEK 1.7 billion in EBIT, which meant that our EBIT margin fell down to 16.8%. There was an operating cash flow of SEK 530 million, Jonas will talk more about that later on. The Board has also decided to propose an ordinary dividend of SEK 9.2 per share, which is in line with our then dividend policy of 75% of net income. If we go to the next page three, we see what I mentioned first, the fact that we are looking at very different quarters. Also very different quarters because of the previous periods, very different quarters.
When you look at numbers, you always need to look a little bit more back. I can assure you we're not doing this to try to in any way sugarcoat the fact that we declined 9.7%, but rather explain what the facing periods are also now looking forward. If we look at quarter by quarter on page three, You can see that in Q1 we had a very strong start of the year in 2022, both compared to 2021 and compared to the pre-pandemic 2019. When you look at that, you can see that we had a 20% growth, or in reported currency, but only 13% growth in currency-adjusted terms versus 2021. We had a 64% growth in Q1 versus Q1 2019 currency adjusted.
A very strong start to the year. As I mentioned many times already when we did the quarterly report and also later on in subsequent reports, we did see a clear bike category load in. When we look at Q2, we then had a almost flat currency adjusted versus the very strong Q2 in 2021, which was also a 43% growth when we look at versus 2019. Came the handbrake pull in Q3, and when we saw that from the bike retailers, Versus a very strong ending of the season in bike in 2021 meant that we saw a decline versus 2021 Q3 of 29%. To be remembered, it was still 23% more sales than we did in 2019 Q3.
That was also the time we then issued a profit warning, clearly telling the markets that we would see a weak Q4 and a weak Q1 in 2023 as well, due to the fact that that inventory rebalancing in the bike retail sector will only really start to happen as the normal bike season starts now in 2023. Finally in Q4, we were 21% behind 2021 in currency adjusted and at a 28% better than 2019. Overall, very difficult and different quarters to track and follow. By default, that also means that we now, when we will be looking at 2023, we have a very, very tough comp in our first quarter, which was extreme and more normal in the second quarter, and then 2 easy comp periods in the third and fourth quarter.
I think that is a clear messaging also to all investors and analysts to not over interpret anything in the quarters as they come. If we take the next slide four, and we will, as we have discussed a bit throughout the year, about how much is the Thule Group exposed in a positive and negative sense to what goes on with bike. If you look at this graph, it shows on a rolling 12-month basis how much of the sales were in the bike-related products, which we do as you know, in all four of our product categories. We have products that are related to biking and using of a bike.
Across those four product categories, if we take all the bike- related products and we compare that with all other products we have across the four product categories and look at a rolling 12 month, you can see quarter by quarter that we were steadily doing around 37% of our sales in pre-pandemic times were bike- related. came the pandemic, and we at the same time had some very successful new product launches. We had just launched some very good new product. On top of that came the pandemic, which drove a general tendency for consumers to use more bikes than ever, both in commuting as there weren't subways and buses, or you might not have wanted to go on them, but also as an fun thing to do on the weekend, et cetera.
When we look at that, we shouldn't remember the strong long trend that had been there for years that e-bikes are very positive for the Thule Group. E-bikes are heavier, more expensive, so the likelihood of somebody buying a premium product to bring their e-bikes is much higher. That means we take a higher share of the market pie at the premium price points. Premium price points on accessories like a bike carrier is clearly bigger if you buy a very much more expensive bike like an e-bike. We were seeing some trends that were positive. On top of that, we had a general biking trend, and then came the third positive for us during the pandemic, which we mentioned several times throughout 2020 and 2021. The fact that we have own operations close to the marketplace while our competitors made everything with sub-suppliers in China.
That allowed us quicker, although we were struggling also to meet the demand boost that came throughout 2020 second half and all of 2021. We did a much better job than our competitors, thereby also grabbing some market share at price points where we normally might not have drained them. We clearly had three factors helping bike to grow faster. As a consequence, as you can see on the graph in how much bike- related was a share of total sales, we saw a going up from the 37%, almost on a rolling 12-month basis, up to 50%. Which meant in certain quarters we even had up to 60% of sales from bike- related products. Now, with the very aggressive handbrake pull, but even before then, we were starting to see a normalization, performing very well in the rest of our categories.
When we were performing well in the rest of our categories already throughout the second half of 2021 and going in even to the very strong beginning of 2022, you can see that the share of bike- related were starting to drop, you see a very dramatic drop in the third and fourth quarter. Actually, when we summarize on a rolling 12-month basis, then at the end of 2022, we are actually back at 37% again. As I've already indicated to you, we will now replace a strong bike quarter, extremely strong 2022, with a weak one due to inventory reductions. We will actually be below the pre-pandemic levels when we summarize on a rolling 12-month basis, bike- related after 2023 Q1 is closed.
What is happening is, as you can see in this graph, we are clearly performing very strongly in the non-bike- related business. We are also, as I've mentioned many times, very convinced of the strong bike trends that are underlying for the long run and about our fantastic product offer in also bike- related. If we go to our sustainability, I can already now, having looked at the presentation just this morning, see that unfortunately there is an error in our sustainability graph. I think the team were a little bit busy last night with a lot of other things going on, as we'll come back to, and some of the graphs were wrong. I will clarify that we will replace this graph.
In reality, our numbers are significantly lower than this, in fact, we are not at the 30 type or 26 tons CO2 per million SEK, but 2.6. We will update the graphs and make that available and release a press release clarifying that. We apologize for that mistake. What did happen in 2022 was we took significant steps in our long journey, which is now committed not only to science-based targets, which we were already from several years ago, but also now to the business ambition of net zero 1.5 degrees by 2050. That whole thing of being committed to science-based targets with an aggressive plan for 2030, we are also now net zero committed for 2050.
We then look at what did improve, although the graph is incorrect, the trend in the graph is correct. We clearly had a much better performance, both in total emissions, but also most importantly, also in emissions per million SEK of revenue. What contributed to that was of course, the ongoing and hard work we have been doing for many years in our own plants. As you are aware, if you have looked at our annual reports in the past, and definitely will be aware when you look at our substantially expanded sustainability reporting in our coming annual report, the biggest part of us in the world of emissions is of course, in Scope 3, in the materials we use for our product.
We have done a number of very key choices in making our product more sustainable by having higher degrees of recycled materials and also low energy-produced aluminum and other products. Generally a very aggressive path of ensuring that we produce and use the right materials is a very big contributor. Another big contributor is more efficient, from an energy point of view and emission point of view, but also from a financial point of view, a significantly reduced air freight and a better utilization of logistics in general. All of that work is something I'm very proud of, so we'll make sure you get the right numbers, and then I urge you to look at our full reporting on our homepage. I can also say I'm very proud of what the team has done.
We have strengthened our team significantly within the sustainability area, and the team is truly living up to all aspects of this work, not just emissions. I'm also happy to say that this is being recognized by outside entities. We are happy to announce that we are one of the top 50 companies out of the more than 15,000 companies that have Sustainalytics value from a supply sustainability point of view. We are continuing that long-term ambition, and as I said now, also with a net zero commitment from the company. We go to the next slide, there is something aside from sustainability that of course, Thule is very famous for and that I have talked to you about many times. This is a product is king company.
If you have a product is king company, it does not mean you are not professional with what you do in your supply chain or how you market that or how you improve your homepage or what you do in social media or how you build your brand. It just means that all of that comes from the core center, that great product win over time. That approach is not free of charge. We mentioned many times that we decided many years ago, when I became a CEO, one of my key main directions was to spend the right amount of money to drive those innovations, both in current product categories, but of course, as we are talking about the future, also entry into new product categories.
If you look at the graph of our spend as a percentage of sales, you can clearly see that both the actual numerical amount of how many millions we spend has been increasing significantly over the last few years. In 2022, we actually hit 6% of sales. Smart people like you analysts and investors realize that we partly had indicated that we would be in the 5+ only. What does this mean? It means that we, with the Board's approval, decided to push full speed ahead with all those large innovative product development efforts despite seeing a slowdown in the second half of the year. That is gonna stand us incredibly well, both in 2023 with some launches coming, with a lot of launches coming in 2024, also in future year.
In 2023 and 2024, we will not only enter new product categories, car seats and our dog-related product, but we're actually replacing all of our biggest sellers in all the other product categories. It's a very big undertaking with lots of extremely cool products in the market coming. We feel very good about that effort. To give you an idea also because I understand that, although only a few million SEK off versus what analysts thought, one thing I think people underestimated, although us having told many times, we don't do phasings of our product development spend. We take them when they hit. We don't do things on the balance sheet. We take the effort as they go, which means that in Q4, we had up to 11% spend on product development.
A very significant push due to the fact of the small revenue season that that quarter is. If we then go to our income and cash situation, I leave it to Jonas to take the slide seven.
Thank you, Magnus. I will, as usual, primarily concentrate on the quarter. Reported sales for Q4 2022 came in 11% lower than last year. If we apply the current exchange rate to last year's Q4, we get 21% lower sales this year than last year for the quarter. It is like in the previous quarter, 2022, the drop in bike-related products, that is the reason. The gross margin is 31.5%, which is 2.2 percentage points lower than in Q4 2021. The big difference compared with the same quarter, 2021 is, of course, that the volumes are lower, which has an impact on gross margin through lower absorption of fixed costs. Our variable production costs have gone down significantly and proportionally to the lower sales.
In addition to the lower volumes, we have also had a negative product mix shift where non-bike- related products with generally lower margins, thereby automatically get a higher share of sales, as Magnus mentioned earlier. Overhead costs have increased from SEK 432 million to SEK 517 million, or 8 percentage points seen in relation to sales. However, almost 40% of the increase in the cost, SEK 33 million, relates to unfavorable exchange rates, and the remaining increase relates mainly to R&D costs for the new product launches, as well as to cost for handling the currently high inventory level. The EBIT margin is 0.2% to be compared with 10.3% in Q4 2021.
To put the margin in the quarter, into a bit more of a perspective, the average margin in the fourth quarter for the years 2017 - 2019, that is before COVID, was 5.3%. The finance net in the quarter is lower than the same quarter last year because of higher utilization of bank facilities and higher interest rates. The tax for the full year of SEK 373 million corresponds to a tax rate of 22.6% to be compared with 22.3% in 2021. We move to slide number eight.
Operating working capital was SEK 3,277 million at the end of Q4 2022, which is considerably higher than at the same time in 2021 and relates to the increase in inventory of bike-related products. The stocking up occurred in the third and fourth quarter of 2021 and the first quarter of 2022. We did not expect to lower our inventory in Q4 2022, since the reduction of bike-related inventory does not start until the bike season starts. The operating cash flow for the fourth quarter 2022 was SEK 91 million to be compared with - SEK 381 million in Q4 2021, which is an improvement of SEK 473 million. The main driver of the positive cash flow in Q4 2022 comes from accounts receivables.
The main difference to Q4 2021 is that there was the inventory build up in Q4 2021 that consumed cash. CapEx was 76, sorry, 67 million SEK in the quarter to be compared with 156 million SEK in Q4 2021. The big difference is mainly explained by timing differences between quarters. For the full year of 2022, the CapEx was 444 million SEK against 506 million SEK in 2021. Thank you.
Thank you, Jonas. We turn to slide nine, where we look at the product categories and how they performed for the full year and also by region. I'm not gonna stay very long on this slide because we're gonna talk about each category separately afterwards. It's of course clear to note that you have the two categories that have by far the biggest exposure to bike- related are the two dipping categories in 2022 versus the exceptional 2021. In Sport & Cargo Carriers, bike carriers is a very significant chunk of the business. In Juvenile & Pet, we are the world leader in premium bike trailers and one of the top players in child bike seats. Those, of course, are actually the majority of our business in Juvenile & Pet today.
In coming years, with more pet products and more car seats and other things, that will of course decrease, but it still is the significant chunk of those two categories. We do have, as I said, also bike-related products in the other two categories, but to a much smaller extent. Let's then instead go straight into Sport & Cargo Carriers, which is page 10. If you look at Sport & Cargo Carriers, you can see that the decline was very similar in both regions. It was 16% in Europe and rest of world, but 18% in Americas. If you look at it very simply, it is the bike racks. We had the bike rack, bike carriers going well at the start of the year, and then we had a very weak end of the year.
Exceptionally so versus the extreme comps in 2021, but actually weak also versus what would have been normal, as we saw really most retailers wanting to sell out whatever they had on stock. We had a strong preseason, as I said, in 2022, when retailers, having felt that they could have sold more in 2021 if they had it at home, went very early and bought a lot, and in fact, too much. Then we got the bullwhip effect in the second half, which will hurt us also in the first quarter of 2023. Within the field of cargo carriers, we have done very strongly this year, and we're very excited about the work with both our roof boxes, but also baskets and other solutions that help you bring cargo on your car.
We're also very excited, and I'll talk more about that a little bit later on some very innovative launches we've just done in the month of February in moving some of the cargo solutions to the rear of car in a very smart way. Within the roof rack category, we had a solid year, and there were some automotive accounts that were performing weaker. If you look at our roof rack category, it is out of all the subgroups, the one that we still sell in more of the more traditional automotive retail channels. In some of those, we saw a relatively weaker performance, while in other channels where we sell our roof racks, we did better.
We also are a producer of some, car manufacturers' roof racks. There it's more associated to specifically which car model we are the supplier of the car-branded roof rack, and some of those did not perform as well. Overall, it was a solid year, which is also what applies to the rest of our business, aside actually from Water Sport products, which were partly also pandemic-boosted in 21 for a longer season when people went kayaking or surfing around. Overall, a solid performance. It really was the bike rack category that was having issues. When we now look at 2023, we have some very exciting launches, but we also have to remember, we have high inventory levels in bike retail now when we enter the season, which means we will be seeing a slow start in Q1.
We are very much getting the signal that inventory is going down. Not as much as we would have liked or nor as much as the retailers would have liked, but it's going down. There is a clear fear factor now for many retailers to prefer to even go short for a period of time, because they don't have the confidence at the moment. Since we are a next-day delivery company that is now up to our old, very high On Time In Full, we also know all our discussions with our sales teams around the world when they talk to their customers, the customers now feel very certain that they can get next day what they ordered the day before from us.
We will truly see pickup in bike from a significant point of view only as we enter the normal consumer high season, which tends to be in mid-April and onward. We have a very cool, I can't tell you more because then my marketing team would kill me since we have a very limited PR launch that is targeted on a specific date. We have, this much I can tell you, we have a new top-of-the-line rear car bike carrier that hits the market in May. Then in our next quarterly call, we will have passed the date when it's been publicly announced, so I can share all the cool bells and whistles that this world's best tow bar-mounted bike carrier will have.
As I said, rear of car cargo solutions, we have launched already now in February, and we are launching, so it's public, some very nice-looking rooftop platforms that create flexibility for that more adventurous type of bringing your gear. I'm gonna show you some images of those in a little while. Let's go to the next page, where we talk about the very successful RV Products category. Once again here, I think our team has done an astonishingly good job because actually the overall European category, which is where we do 92% of our sales within RV Products, was not doing so well. Overall, it had a double-digit drop in number of vehicles sold and also in number of vehicles manufactured.
The reason for that was mostly the fact that there was long order books still from consumers wanting to buy motor homes, but there were still manufacturers were struggling to catch up with demand due to lack of chassis to build these motor homes on. Overall, we had a very strong growth of 17%. As you see, we had 43% in Region Americas, but it's a very small niche where we are playing with some smaller van solutions. Still very nice, the chunk of the business, the lion's share of the business is definitely at those 92% in Europe. A very strong performance considering the sector overall. The consumer demand, which is the interesting one going forward now, is there.
We have said, and I'm probably the one accused most of anybody as a cry wolf person when it comes to can it really continue in the RV product sector. I've been wrong a few times when I've said, "Hmm, it seems a little bit optimistic." What we can say is that the trend of consumers wanting to do this type of occasioning is very strong, especially among the young, especially among the type of people that we love, the very active, that want to go mountain biking, kayaking, et cetera, and want to be flexible how they move around. The smaller vehicles speak to our favor, the more active people being now not only a 55, + , I mean 56 +, soon a 57 +. I know also the more senior group, as we're called, also more active than ever before.
That fits our product and it fits our brand. That's the biggest concern I think anybody has, and the 3 stock-listed companies that represent about 60% of all motor homes sold in Europe. Knaus Tabbert, the Thor group with their European brands, and Trigano, are all mentioning the fact that their order books are still very long. The question that they are starting to pose, and I think correctly so, and we are posing to ourselves, is that if you are a consumer that truly wanted to do this, you probably haven't changed your mind on wanting to do it. What might have since you were placed in that order book changed is 2 things. The price for that vehicle is now clearly higher than you when you mentally committed to it, because costs have gone up significantly since these order books were starting to grow.
The second point with a concern of bigger ticket item, differently from a bike carrier for EUR 500 to EUR 900, you're talking about the commitment of a full vehicle of EUR 50,000-EUR 70,000, EUR 80,000. That is a bigger financial undertaking in what might be a more uncertain world. I've said a few times before that we shouldn't look too much back on the big dip that the RV industry had in the financial crisis in Europe in 2007, 2008, and 2009, because there were two things that made that dip happen at that time. One was the true concern by the consumer of will I be able to afford this? Can I do it?
There was also at that time a very clear actual limitation when the banks told them, you can't borrow money on your home or your apartment to buy this. What the industry in the RV sector did very smartly since, was they set up their own financing solutions where it will now be purely this decision from the consumer's point of view, saying, "Am I prepared to pay these monthly costs for this?" We believe that although the order books are strong, it will be making some people walk out of line. There is only so long you can wait on your dream, and if it, at the same time, also gets more expensive. We will see, I think throughout this year, a situation where this will clarify as the supply chain starts catching up for the vehicles.
We will see if the consumer is still there standing in the same queue waiting for it and prepared to pull up a clearly higher bill for it. We're cautious for the industry. Once again, for all the years I've been here and the team has been driving this category, we've always beaten the market. I'm convinced our team will continue to beat the market also in the future. If we go to our next page 12, and look at Juvenile and Pet. We all know that at the moment it's Juvenile, but it will soon be Pet, so that's why the name is there.
If you look at it also here, a similar performance in % across the two regions, but a difference within the stroller category, where we've already announced late last year that we were not happy with our performance on strollers in the U.S. market, and therefore triggered some staff changes. Aside, the overarching picture is the same. The bike-related products were definitely hurt during the year in the similar way versus that fantastic 2021 we had in the bike-related juvenile product. The bike trailers clearly were hurt and child bicycles were. Same logic there. Strollers, we did well, aside from U.S., as the U.S. is a big market, that of course something we needed to act upon and have acted upon, and we're wanting and striving to turn that trend around in the U.S. and get better.
Overall, we feel very good with our assortment and the work we're doing to be a bigger player. Of course, when we now look forward, there is this momentum in bike that is not so much us, it's the industry. It is us fixing our own stroller approach in the U.S. Now a lot of the work is ensuring that we go the right go-to-market approach for our new products and product categories, the car seats for children and the dog-related transport solutions. Every market we're in, we're doing those evaluations, talking to those partners. Looking at where we will be, and in some cases, we can already say we will choose to only go direct-to-consumer for some of the products.
In some cases, we will apply the product across to those current customers, and in some cases, it will be new retail channels to meet. There's a lot of work ongoing, not only from a product development approach, but very much so in a commercial approach for being successful with those new categories. If we then go to the next page 13, and look at the strong Packed Packs and Luggage performance, it is, to be honest, a little bit also the same here. We shouldn't be too much patting ourselves on the back because we also are comparing with weak comps. If we all the time repeat strong comps and have that as an excuse, which is true, we also have to admit that 2020 and 2021, the whole Packed Packs and Luggage category went down a lot.
Thule went down a lot less, one, because we were a small player, and two, because the types of bags that we did and do are less focused on international air travel and sliding around, the terminal, with a bag, and more around general travel and commuting and, working in the city or going out hiking, et cetera. We were less exposed, but we were clearly exposed to a significantly reduced back-to-work and back-to-campus and traveling in 2021. Therefore, the comps are relatively easier. It's still nice to see now a 51% growth, as you see also this one, very similar across the two regions. The biggest driver was the back-to-work . Clearly also our successful launches of a number of collections for more international travel.
In the image you see our hugely successful Thule Yepp, Aion series with 100% recycled materials. It's one of those I often joke about who and when I meet investors, I always try to tease them to see which product they would like. This is one of the cases where every time I come, I have my 26-year-old and 25-year-old daughter home with their boyfriends, there's one of these bags missing in my home because they grabbed them. That's always a very nice sign. When we look at this category, we also have to remember, although we don't wanna speak to you investors too much about it, but we do admit it, we have some legacy products here. We've mentioned it many times over the years, they continue to shrink.
It's the camera bags, it's the tablet folios, et cetera, where we play clearly a game of last man standing, making money on them as we have them, but not focusing new efforts on them. They continue to decline, and they will continue to decline, and we will continue to play that smart game of making money on them while we can. In 23, I am very happy with what the team, our design team, has done a tremendous job, if I look at all the collections we've launched the last 18 months. Our new product management lead, where we have strengthened our team, is definitely hitting it the right way. We see the ones coming as well. I am sure you will see much more Thule bags around the world in the coming period because we have a number of very strong collections.
Also because, let's be honest, there were a number of brands that died during the pandemic. If you were a pure, smaller or mid-sized player in packed packs and luggage during the pandemic, you're most likely not around. If you are around, you have reduced every spend, every design effort, et cetera, to much more. There are, of course, some formidable competitors still around. You have the Samsonite group, you have many more. There was clearly a some spaces on the map that became white. With our strength, doing also other categories, the great design teamwork, and a new product management we've had in place now for more than a year, I am convinced that we will be one of the winners in the coming years.
There is challenges, though, also here, because here we have a challenge, like everybody in Packs, Bags & Luggage, that now we are struggling to meet demand for bags. The logic is simple. When an entire industry went down as much as 50%, 60%, 70% in how many bags were sold, what happened was a lot of those Southeast Asian-based suppliers, and ours are mostly in Vietnam, actually had to close down. When they then were about to open up, there weren't as many around, and some of them will never commit to the Packs, Bags & Luggage category again, which means there is a constant struggle for all of us as brands to get those suppliers up to the capacities we'd like.
There is also a fact that throughout 2022, we still had some quite aggressive COVID restriction measures around those markets where these products are being produced. We and everybody else in this industry are now hoping for a more normalized supply chain. Good things ahead also for Packs, Bags & Luggage. If we then finally, before we open up for Q&A, look at slide 14, we can talk about what's the focus for the coming period. When you look at the coming period, it is really more of the same. If the same is brilliant, then why change it, right?
We have a very big focus on continuing to drive our growth-oriented strategies that we've had for many years, which means we're gonna work on our total commercial offer, we're gonna keep on hitting with product is king, and we're gonna work with that flexible supply chain set up to meet changes as they occur. Of course, keep on having a slim line and effective back end. If you look at it, I know I'm gonna get the question anyways, we might as well anticipate it. What about prices for 2023? We did several price increases in 2021 and 2022. In fact, 4, which is, of course, something that was necessary with everything going on in the market.
When you therefore look at going into 2023, we announced to our customers that aside from Packs, Bags & Luggage, where there are clear price increases, there are, with a few exceptions, no price increases in 2023. There will still be a positive price impact in 2023 versus 2022 because our final price increase in 2022 was only done mid-year in July. As you also are then aware, since we had relatively weak second half of the year, the volumes that came out with those relatively higher prices were limited. Those will now be, of course, applied to the full year. We do have a low pricing effect happening also in 2023. If you look the work, the marketing team is doing a great work.
I'm showing on the right-hand side two examples of how we communicate in social media. They just launched Thule Arcos. Since there are some images and it says, "Bring more, go farther," I want to give you a little bit more about this brilliant new product. Here we went into what is truly doing something from scratch with a logic of, with more and more electrical vehicles and more and more range anxiety, we need to make it easier for consumers to go on those trips, to do those fun things they wanna do. That's exactly what the Thule Arcos solves.
By moving the cargo solution and by the patented design we have of this product to ensure that it is very energy efficient in terms of wind drag, et cetera, we have found a way of making this happen. We can give you some examples, and you will see when it comes out in various magazines reviewing this product, there are cases with certain models of e-cars, like the ID.4, for example, where actually applying the Thule Arcos at the rear of the car reduces your battery consumption and allows you to go further than if you didn't have the box. Generally, you can say very, very limited negative impact, some cases even positive contribution versus a roof box, which we do know does impact.
It, of course, for the truly super outdoorsy person, it also allows you, for example, instead to put the Thule Approach rooftop tent up on your top of your car and still have the cargo solution at the back of your car. A brilliant product, which I already see here on the parking lot outside the head office on many of my colleagues' cars, and very good start on our sales of the Thule Arcos. In a few months, we are launching in the stores Thule Caprock. As you can see on the imagery here, we're talking about those true rugged outdoors fans that wanna bring lots of gear on top of the vehicle. It doesn't have to be a Land Rover or an INEOS Grenadier.
It can also be a normal car where you put this platform on top, allowing you to really store lots of cool stuff and lots of gear to bring. Already pre-teased the big bike carrier launch. There's lots of other cool products coming out as well. We are also continuing generally our big push of ensuring that both online and brick-and-mortar customers do get better sales supporting tools, and we are doing a huge uplifting of our own thule.com. With that, it also allows us to further boost the fast-growing direct-to-consumer sales, which grew 85% in 2022 from very low levels, but still we have a momentum. There is a in the long-term strategic plan, we've agreed with the Board a much more ambitious growth plan going forward with direct consumer. We feel very good about those efforts.
We will continue to push our product portfolio expansion and our product development spend, and feel very blessed to have had the opportunity to have people truly back in our state-of-the-art product development center that I know a number of you visited when we had our Capital Markets Day in May. Those facilities are being used in a very good way. It is inspiring to work and getting prototypes ready and keep dominant very quickly. The output level in terms of new patents applied doubled in 2022 versus 2021. It shows this working together at the premises with the right things, with the right teams as we have, truly generates lots of cool new ideas. The little bit tougher news is clearly if you're a CEO of a company and you have employees that you cannot have a job for.
Here the situation is that when you sit with high inventory levels, which we do, it is clear that we are not gonna build up even more inventory. We will use and sell out that inventory, which is great from a cash flow perspective in reports in the financial markets, but it also means that we will have fewer workers in our plants. We have very successfully been able to deploy our three-tiered approach with fixed employees, seasonal Thule employees, and a large amount of temporaries, but from agencies. We have to say we've also had to reduce within the fixed workforce. It's something we do not take lightly, but we are, of course, ensuring that we can run the company in the best way. When we compare, now here at the season, we're about 800 people fewer than we were when we ended December.
That is a sign of how we have used this flexibility, as we will also, much later this year, start to ramp up. We will need to take in temporary and seasonal staff also this year, but that will come much later and to a lesser extent, as we instead use and sell out the product we have in stock. We are doing other factors that also from a future perspective, will mean that the staffing won't need to go up so much in the future, should those, as we expect, quantities come again. That is because we have had a very high degree of automation focus on all our more new launches. These new lines for these new products are significantly more automized than they used to be.
Now, we've designed the product from the beginning with a true sustainability thinking in terms of which recycled materials and what that means for the design, et cetera, but also from which automation methodology do we want to be able to use, so we design it correctly from the beginning. You are aware that we have had two years with much higher CapEx levels than historical. That was due to catching up with the capacity demand from a pure being able to satisfy the capacity. It has also been related to some big automation investments for some of the new production lines. Of course, it's been associated with the fact of preparing our plants for the assembly of towbar-related products and car seats, and as we also mentioned, for the big investments in our Thule development center and our world-class Thule test center.
We will now go back down towards more normalized levels. We have some of those last big automation things happening, not last, but for the current launches, some are relatively large automation investment, but CapEx levels will be going down significantly if you look forward now. Clearly, as I said, we will generate strong cash now. We are selling from inventory. Cash generation will be strong. If I conclude before we open up the floor for questions, we will have very tough comps, especially in the Q1. The first four months was very strong last year because we had this bike season. We will have a very easy comp period in the second half of the year because of the very extreme handbrake pull by the bike retail.
Overall, we all know there are many uncertainties around the world in terms of consumer economy, in terms of how confident are retailers. All the signals we are getting is that bike retail has its view of coming back in the season, but not in the preseason, but in the season starting to roll again. Same thing as all the indications we're getting from all our other product categories. I did put in a asterisk and a warning about a potential further slowdown in the RV industry, but I know our team will do everything they can to overcompensate that with continuous market share wins. We need to be flexible, and that's why we have been cautious of bringing as many staff back as we normally would have this year because we want to have that flexibility. Finally, addressing the elephant in the room.
As you have seen yesterday evening in the press release, there will be a new CEO of the Thule Group, Mattias Ankarberg, currently CEO Byggmax, a Swedish DIY chain. He has also been on the Board of the Thule Group since 2018. He will take over as of August 9th. For everybody that knows me, and luckily there's a lot of people in the company that do that, and some of you out there, hopefully have the same view as my colleagues have. They know I'm an all-in type of person. I've had 17 brilliant years with Thule. It's been engaging, fun, and also I would argue myself, very successful.
I'm very, very focused on making sure that all those great colleagues, all of you investors, will get the best of Magnus Welander in the coming six months, enabling Mattias to get off to a brilliant start. In the end, the Thule Group was super successful for six decades before I took over. It's been very successful during my reign. I am 100% sure with those great colleagues that we have, that fantastic global lifestyle brand and a very well set up supply chain, we will see a fantastic Thule also when Mattias take over. With that, I can still say you're gonna hear my voice for two more quarterly reports. Don't give up on it yet. Therefore, we open up the floor for questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star followed by one. Due to the number of participants on today's call, we kindly ask you limit your initial questions to allow as many people to ask a question as possible. If you do have any follow-ups, then please rejoin the queue and we will try and get through as many as we can. Thank you. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. The first question today comes from the line of Daniel Schmidt from Danske Bank. Please go ahead. Your line is now open.
Yes, good morning, Magnus and Jonas. Maybe two questions from me, though, if that's okay. Firstly, addressing the elephant in the room maybe. Given the downturn that you are currently in, sort of what explanation has the Board given you, when it comes to this being a good timing to make changes when it comes to the CEO?
The Board, I think as per the press release, the Board has done, as a Board should do, their evaluation of succession planning and who should be running the company. They've chosen the time. I think that is a question for the Board.
Okay. You don't wanna give any sort of indication on why this is a good timing, they think?
I think as per the press release, the Board feels, as clearly outlined in the press release, that we have a very exciting future ahead. We're about to enter a number of new product categories and to have a new leader in charge as those categories and the current business will grow with more direct-to-consumer and more commercial push. I think they see a profile with that as a good timing to come in. That's my understanding.
Okay. I don't know. I just think that it would be more sensible to do that once you're out of this slump, but maybe that's just me. Moving on. You mentioned of course that the sort of retailers' inventories are moving in the right direction, although maybe not as fast as you hoped. It sounds like you're planning to be back to normal production maybe in April. What does that sort of require in terms of sell-through performance up until mid-April?
Even in a very conservative assumption, and we actually don't have that conservative of an assumption when you look at it compared to long past history. You have to remember how extremely good 2022 Q1 was, right? It was 63% up versus 2019. It was an exceptional first quarter. Otherwise, we will see lesser sales than normal in bike- related. We see they are selling our products, so we feel very good about Q2 picking up and therefore, we are going to be cautious in bringing in those temps, but we will need to add on staff. There's no chance that our own staff will be able to cope with the volumes even in a negative scenario. That flexibility of meeting a more normal scenario or even a positive scenario will be handled by temps coming in.
On that topic, sort of when it comes to the bike season, do you feel that that's gonna be driven by e-bikes again, or is it any sort of mix shift going on in the market currently? What's your sense there?
It's clearly e-bikes are winning even more despite this, I think, obvious concern from any analyst or from anybody watching the industry because an e-bike is so much more expensive than normal bikes. It is no doubt all the data, all the statistics, all our discussions is saying in 23, the share of number of bikes sold, so not the value, but number of bikes, will continue to grow significantly with e-bikes at a fast track. It's also partly, as I'm sure you are seeing in the streets of Stockholm, when you see a lot of commuters going. After a while, when you've seen so many people going with that e-bike trend, there is also this whole everybody's getting used to it. Everybody's starting to accept what that price point means.
It is still a very, very efficient commuting tool at a relatively, versus what you can do with it, low expense versus many other commuting tools.
Right. Good. Maybe just one last one. Anything sort of. Could you give any guidance in terms of product development planning for 23?
I think if you look at it will be in over five again. We will see that will always trigger up, but it will be clearly above five. I don't think it will be six, but it will be above five.
Thank you. Thank you, Magnus.
Thank you.
Thank you. The next question today comes from the line of Gustav Hagéus from SEB. Please go ahead. Your line is now open.
Thank you, operator. Thanks for taking my question. A follow-up on Daniel's first question there. Admittedly, both you and I and many others underestimated the bullwhip effect of the bike- related products last year. I think few would challenge the performance you've had as a CEO over the past 17 years. Probably very few have that track record in terms of organic growth and shareholder value. With that in mind, can you perhaps still shed some light on if this discussion with the Board has been a gradual one over the last year, or if this was more of a surprise to you? If you have understanding for the Board's decision or if you would have rather kept on going?
I think sometimes I think it's very clear even in press release that I would have preferred to still be the CEO of the Thule Group. I'm not hiding away from it. It's not me making the decision. I would have preferred that. I understand it's the Board's role to look at the future and long term for a company. It's the Board's role to judge what they see as the best way for not just the short while or for just one person, but for what they think is the company is. It's clear that they do a succession planning continuously. Of course, although I don't consider myself that old, I am 57 soon, and they must have challenged long term that over years.
Now when the decision comes, the decision comes, and I've been informed, how that went on, for how long, the exact decision when it comes, it comes.
The market cap currently is down some 18%. I think the deviation to your EBIT on a full year basis is less than 1%. Clearly, the market was not as thrilled about this change as the Board maybe. Yeah, let's leave it at that. I'll hand over to the next questions.
Thank you. The next question today comes from the line of Carl Deijenberg from Carnegie. Please go ahead. Your line is now open.
Thank you very much. Hi, Magnus and Jonas. Two questions from my side, starting on the Q4 development here. You disclosed here on the full year development and also here in slide four on the sort of bike-related development here on the rolling 12-month basis. I just wanted to ask you sort of isolated from Q4, I know that's a smaller sort of share of the group sales, but has the year-on-year development in Q4 been fairly similar in bike-related sales as you saw in Q3? Following up on that, are you still growing on an organic basis in Q4 in your normal bike-related categories? That's my first question.
We are growing in the non-bike-related in Q4. The reason why we are so low on bike is mostly because normally the bike season in the big northern hemisphere markets, where we do the majority of our sales, is normally a relatively low period in Q4 for bike- related. As I mentioned, in North America, we were catching up still in 2021 Q4, and that's why the drop in performance by region is so more distinct in North America because we had more, let's say, very late far behind normal season, lots of bike sales in Q4 in the region Americas, in US and Canada then.
If you look at the southern hemisphere markets, which are smaller for the, to the groups, we're talking about Latin America countries, some Southeast Asian, mostly, and South Africa, for example, and Australia and New Zealand, very strong markets for us. There, if you look at the bike retail purchases, they're not nearly down as much as the European ones. The reason is due to their seasonality versus when pandemic hits versus seeing signs of bullwhip, et cetera, they didn't go as wild. If you look at it, the answer to your question, yes, we're growing on our, the rest of the Thule Group. Yes, it is similar trends actually due to that for bike, due to the fact that we sold so much bike when we normally don't sell it in the region Americas in Q4 2021.
Okay, very well. Thank you for that. Following up on another topic, I wanted to ask a bit on the gross margin here. It's down quite a bit here in Q4 against fairly sort of easy comparison, if I can say that. I understand that say partly due to the mix of lower bike- related sales here. Could you say anything sort of with regards to with the other effects that you're highlighting here in the report, sort of the effect of the lagging freight rates, et cetera, et cetera. Given the inventory you're entering the new year with, sort of how long should we expect that sort of lagging negative effect to persist into '23?
From an under absorption point of view, which is clearly the significant factor that we are not utilizing our plant as much, you can say that clearly it's the case that we have been very efficient to adjust our direct wage component, right? We're not having any higher direct wages. They're actually proportionately lower. Our production overhead, because of very low capacity utilization, has gone up a few percentage points. That's hitting across. As you just heard me say, that will be penalizing us also in Q1 because we're not producing nearly as much. It is the underutilization of the capacity due to the fact that rather than keeping on filling up inventory, we will sell down the inventory we have, will be hitting throughout Q1 and then normalize again in Q2.
Okay, very well. My final question was with regards maybe to Jonas, with regards to the net financials here in Q4, up a bit here sequentially. I just wonder if you could sort of remind us of the term structure of your interest bearing debt. I guess the net debt will come down here in 2023 given the expected inventory release. Could you just remind us sort of the loan structure that you're carrying, and is that on floating interest or anything on that item would be very helpful going into 2023?
Yes. We have, we are in long-term debt, and we are quite normal due period for our long-term debt. The due period is definitely beyond when we expect to come down again with our reduction of the inventory. It's, if I remember top of my head, it's average at 2 years from now.
Okay. Is that mostly on floating or are you on fixed interest on those longer terms?
No, it's floating.
Okay. Thank you very much. That was all from me for .
Thank you.
Thank you. The next question today comes from the line of Karri Rinta from Handelsbanken. Please go ahead. Your line is now open.
Yes, thanks. Thanks for taking my question. I have two. First, going back to the press release last night, after talking to some investors this morning, it seems that there's two theories that might explain this. One is that you have pushed too hard into these new categories and have been misaligned with Board's view on how aggressive you should be. Maybe you have already refuted that when you said that, with Board's approval, you have continued to invest into this. Maybe you can confirm that you're fully aligned with the Board.
I can confirm that. I can definitely, Karri, I can definitely confirm the Board and Management are 100% aligned on the strategic direction of the company and the efforts we're doing. There is absolutely no view from the Board on the strategy. They have fully bought into it. They're fully buying into it still. It's not about the strategy or where we're going, definitely not.
Thank you. The second theory is that, given the weaker than expected profitability development that Thule would need to enter into a cost-cutting phase. My spontaneous response has been that, well, there isn't that much cost to cut. Theoretically, what could you do if you were tasked with cutting costs?
I'm not gonna speculate on hypothesis that others have. I think, I've shown throughout the years, and I know the Board is very confident with that. We've had a very close interaction with the Board about our plans of staff reductions, utilizing our flexibility set up, doing the right things at the right time, which we also showed very much so during the initial phases of the pandemic, where management was very clearly aligned with the Board with frequent discussions. Definitely, we don't have any difference of view there from a Board or Management perspective in being quick to act if we have to act and being still very much long-term winning over time. There is a perfect alignment there from a Board and Management on that aspect.
Perfect. More back to this is the not bike- related and the solid performance that you had there throughout 2022. If we would strip away FX and price, was non-bike- related up last year?
When you take price, it's always, yeah, it always depends on versus which period. If you look, you also see a mix effect. If you take, for example, within cargo, we have seen a very strong performance on our more, I would say, better boxes. We have good, better, best. Our better box, roof box segment has done fantastically well throughout 2022, both in units and in share versus others. There is a combination factor. Clearly, since we always report our category numbers and our regional numbers with FX adjusted as well, because we clearly with the weak Swedish Crown, otherwise we would look much better than we are. The reality is that if you clean that out, you can see that in, for example, the roof box, we're doing really, really well. There are differences.
I did mention, for example, Water Sport versus 2021, we did not do as well. Clearly, since we've discussed it a few times, Karri, about we have done now price increases, 4x , it is clear that if you go further back, the price is a significant chunk of the growth in some of those categories. There is clear volume growth versus pre-pandemic as well on most of our categories, and definitely on things like RV Products, Packs, Bags & Luggage, and boxes and roof racks, there is.
The final follow-up on that. If it turns out that the demand for non-bike- related weakens during the year, is your level of flexibility in reacting to that higher than what it is in bike- related? Because a lot of the bike- related are products that where you have high degree of vertical integration, i.e. that you assembled them yourselves and you source components yourself, versus packs and luggage, you do a lot of outsourcing. You have better flexibility in non-bike- related.
I think better flexibility is a little bit of a, depending on how you interpret the word, our flexibility in terms of being quick to respond is phenomenally strong on the things we produce ourselves. There is a downside if then there is a complete stop in ordering or a very dramatic shift. Absolutely. As we've admitted in capacity underutilization. If you take it across the categories, you're 100% right. Packs, Bags & Luggage is 100% source product. We don't do them ourselves, which theoretically from a pure cost point of view gives you a lot of flexibility. From a purely operational point of view, it actually makes you a little bit less quick to ramp up and ramp down, I would argue, because it's not like you can move these back to any supplier. You have a few limited suppliers.
They are further away. They're in Vietnam and other places, Southeast Asia. From a cost, if the market would go down, you're absolutely right with tax and luggage. Within our Juvenile & Pet Products, we have a mix. We do some of the assembly ourselves. We buy some of the products from suppliers. There's a little bit of a mix. In RV Products, we do the products and the production ourselves in our site in Maine and in Belgium. If you therefore look at it, there is a flexibility in all of these, which is based on the same three-tiered approach. Fixed employees, seasonal employees from Thule, and temps. We had 21, where we had very, very many temps that almost didn't become temps from the agents anymore because they were there for such a long time.
There were still agents who work us with that flexibility. If you now look at what that means, I can give you an example. I was visiting our Polish sites phenomenally improved after the big CapEx we've had over the last few years, really state-of-the-art manufacturing assembly plants, together with our global head of supply chain, Rick Anderson, the last week. When you look at that site now not needing to produce as much because we have too much bike carriers on stock. We, for example, have 20 Polish employees in our Neumarkt, Germany, box plant because we are selling so many roof boxes that we otherwise would have had to take in temps from outside. We're trying to create that constant flexibility in the whole setup.
There is, as always in business, even if you have a sub-supplier, there is a certain level of your flexibility. At a certain point, it starts to hit on your fixed costs.
Great. Thanks for the color. Thank you, Magnus.
Thank you.
Thank you. The next question today comes from the line of Adela Dashian from Jefferies. Please go ahead. Your line is now open.
Hi. Yes, good morning. Most of my questions have already been answered, but I do have one. That is that there's been a couple of reports of product recalls during the fourth quarter, especially in the U.S. and Canada or in the U.S. and Canada. Is that something out of the ordinary for you? Did it have an effect on sales in the Americas region? If so, by how much?
If you're a safety-oriented and quality-first company, you will always have product recalls. You want to limit them, of course, to a minimum, and you want to be efficient. Since safety and concerns and quality of our lifestyle brand comes first, you want to go out proactively. What these are all about is convenience issues for when you operate the product. We are then quickly replacing or supporting how to fix those things. None of it has impacted anything on sales. Of course, it does impact extra work in your operational item. These have been very small, limited quantities that we could fix very efficiently. You never like them. It's never good.
Got it. Thank you very much.
Thank you. The next question today comes from the line of Mats Liss from Kepler Cheuvreux. Please go ahead. Your line is now open.
Yeah. Hi. Thank you. Well, a couple of questions. First, I mean, the inventories there, are on the high side, and you mentioned that you will sort of reduce them gradually, but do you see any sort of need to have an extra push there and marketing campaign or et cetera to make the reduction? Or are you still sort of well, keeping the inventories for yet another year? Would that. I mean, you have mentioned that products are sort of sellable, and don't get older. Could you say something about that?
Yeah, absolutely. I think in general, you have to split it in two parts. For example, when you look at the bike-related products, to try to push them when bike retail isn't interested in them is just wasting money, honestly. You need to see the bike season coming. Since when we see the bike season coming, we will quickly start producing the bike inventory as we're not producing nearly as much bike products as we would normally do at this time of the year. There, it wouldn't make any sense. What we are doing, as you do always as a company, is that you constantly evaluate all your products in your portfolio. We do that every year, and we've done it in the past years as well.
If you, for example, are about to launch a new product to replace an old one, there's always that ending part where you need to choose what you do. Sometimes you feel that it's better to sell it off in some markets or to some retailers over longer time. Sometimes you feel that it's better when the market knows that there is a new model coming, like the bike industry always does, right? There's a new mountain bike coming, then there is a certain level of discounting. What is good for us is normally the retailer is doing that discounting and not us. Sometimes you want to help them with that. You don't do it by lowering the price because they already have the product. You do it by helping them, as you said, maybe with some social media campaign and some new imagery, et cetera.
There is, as I've said before, no plan whatsoever from the Thule Group to start doing huge discounting because we are confident that we will sell down this inventory anyway.
Okay, great. I guess, I mean, it's a lot of sort of consumers are between a rock and a hard place in many ways, and, you see the trading down, choosing a more affordable products. Do you see any sort of risk of that happening to you?
I think the trading down question is a little bit tainted by fast-moving consumer goods, where that is clear from all the reports you're seeing from Co-op and Lidl and everybody else, right? What happens when you look at seldom purchase consumer goods in tougher times, which has been proven by a lot of studies by a lot of firms, right? Is that who struggles is the middleman, because the people that normally like a quality product think even more about it, knowing I can sell this Thule Chariot bike trailer in four years' time for 60% - 70% of the value on Blocket. Why not buy a really good quality thing that I can really use and be comfortable with and then sell on versus an okay competitor? As also is obvious, some of the very low end will win.
We never played at that low end or the lower part of the mid-price segment. That part doesn't affect us. We are not worried that those customers evaluating that premium offer would walk away. They would rather buy the quality product and the quality brand they wanted and feel good about how they utilized it, how long it will last, how sustainable it's been made, and how they also can sell it as a secondhand item.
Okay, great. Just finally about, I mean, gearing, you ended the year with, well, some gearing anyway, and you tend to reduce the inventory and so on. Do you think that the current level is sort of limiting your opportunities to, well, explore new opportunities and do things? I mean, you also mentioned that CapEx is sort of, well, coming down, but yeah. Could you say something about that?
We see no limitations from. We share a very clear common view with the Board about we have the necessary funds to do all the initiatives we want to do, and we have a gearing that is very comfortable for that. No, when it comes to how many initiatives and what we do, it's more about needing the right resources and having not too many things on your plate, because if you have too many things on your plate, you risk not doing them well. Very strong alignment from us and Board on the money's there, the initiatives are there. It's just let's make sure we focus on the right ones and get them to deliver.
Okay, great. Thanks a lot.
Thank you.
Thank you. The next question today comes from the line of Peter Testa from One Investments. Please go ahead. Your line is now open.
Hi. Thank you for taking the questions. I would just briefly echo the sentiments of the other people about the news last night, just briefly. The questions I have, are firstly, just on the non-bike channel. You talked a bit about maybe some caution among automotive, and I was wondering if you could just give some sort of sense as to what sort of behavior you see in the non-bike channel and how that it might be, you know, perversely reinforced by your capability of delivering.
I think in general what you can say, Peter, is you see retail, not just bike retail, you see all retailers being cautious. It would be strange if they were not. They have seen what happened in the bike sector. They see the signals. There is a greater level of caution, I would argue, from all major retail chains. You can see that in the ones that have public reports, like a Halfords or an REI in the U.S., et cetera. There is a caution level in there. I think over time, it speaks to our favor of because we are very good of not forcing them to keep it in stock or take full containers load from China, et cetera. Over time, it is strengthening our market positioning with our approach.
Of course, I mean, it means that we're not gonna have the easy wins. We were joking, myself and our Head of Sales over in North America, Hilary Hartley, about it's a lot of discussions when we are meeting with our sales organization. Those huge big orders from even big retailers aren't happening, so we are winning very many small orders at the moment, and that's the reality I think will pan out throughout the year.
Yeah. Okay. Thank you. Just a question on price cost. I mean, it sounds like price cost was relatively neutral in the fourth quarter. I was wondering if you have any visibility on the cost side improving as you go through this year and how that then works vis-a-vis price and the extent to which you may, you know, use some of the rollover benefit to either manage margin or to manage competitiveness.
I think, it's a reality. You're right. We were very nicely matched with price and cost from a pure input cost point of view. If we wouldn't have had too much on stock, which we have to admit we have, we would look very nice now with our price increases from mid last year rolling through and costs as they are. We have some of those too much that we bought at those prices, which were relatively higher with freight, et cetera. The positive impact of that price increase is rolling through with full year effect, and the cost will come more as we come into versus mid-year.
Okay. Then the last question was just on, you were about 35%-36% above 2019 in Q4. I know you don't wanna give a precise number, but when you look at the kind of range of seasonality going forward and that is a, you know, 2019 as a base, is that something we should think about as we look at sort of Q1, Q2, et cetera, or any other comment?
We will be not doing as well in bike and do better in the other. The logic is this, normally even in 2019 and in other pre-pandemic years, we would have some pre-season sell-ins to some retailers that prefer to have a little bit too much on stock before the season started. We will have fewer of those people doing that this year. Bike will start slower, even versus 2019. The rest of the business, I'm confident will continue to outperform significantly in 2019. That's, I would say from a like for like comparative reality, that's the difference with Q1. The opposite then of course takes effect in Q3, where normally we have a pretty strong ending season of the bike- related, which we absolutely will have this year as well, where we then have more normalization.
It's Q1 will be the most specific also, not only versus extreme 2022, but also versus a more normal 2019.
That's very helpful. Thank you very much, Magnus.
Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star followed by 1 on your telephone keypad. Our next question today is a follow-up question from Daniel Schmidt from Danske Bank. Please go ahead. Your line is now open.
Thank you. Just a follow-up from me then, Magnus and Jonas. Coming back to sort of retailers inventories, could you shed some light on if there's any big difference between the North American market and the European market where we are in that sort of de-stocking?
There isn't a big difference in de-stocking versus what they used to have before the pandemic. Retailers in the U.S. have always had much more on stock than retailers in Europe, though. That's always been the case. You know that I've been talking about that for many years, right? It's a factor of life. Of course then when you are then more afraid and more cautious, there is also greater opportunity, so to speak, for a U.S. retailer to take out even more than there is for the European retailers to take out even more than they used to have. From a versus their historical past, it is more the fact that there is more fat to trim if they truly wanted to trim in U.S. retailers.
That will be the thing to watch out, I think for any brand when you look at the first half of the year, if those U.S. retailers realize. This might be the year they decide to go on Atkins and start to have more like European retail levels of inventory.
Is it fair to say that that is also what happened in Q4 if you look at the progression on both continents?
I think no. The significant factor in Q4 was actually the comparative logic. The most significant was that 2021 was so boosted with us catching up with demand of bike, which is normally not something we sell. You're partly right. This most significant factor was that bike selling in a weird off season in 2021. Part of it is I think they are slowly but surely realizing in U.S. retail that if you have strong brands that can deliver, why do we have so much in store?
Okay. Okay, thank you. That's all for me.
Thank you. Thanks.
Thank you. This concludes today's question- and- answer session. I'd like to pass the conference back over to Magnus Welander for any closing remarks. Please go ahead.
Thank you very much. Thanks everybody for listening in. We look forward to an exciting Q1 report when we will be able also to tell you more how the whole bike market and what is happening in retail. I will be allowed to share without being smacked on the fingers by my Head of PR and Marketing, the very cool new product we're doing in bike, and we'll share some other news of how the business is developing. Thank you. Have a great Friday.