Thule Group AB
STO:THULE
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
American Express Co
NYSE:AXP
|
Financial Services
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Target Corp
NYSE:TGT
|
Retail
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
241.6489
366
|
| Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Estee Lauder Companies Inc
NYSE:EL
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Church & Dwight Co Inc
NYSE:CHD
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
American Express Co
NYSE:AXP
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Target Corp
NYSE:TGT
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
Mueller Industries Inc
NYSE:MLI
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Thule Group AB
You don't have any saved screeners yet
Hello, and welcome to the Thule Group 2021 Year-End Results Call. My name is Lauren, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to our host, Magnus Welander, Chief Executive Officer and President, to begin. Magnus, Please go ahead.
Thank you very much. So great to have you on the call to summarize a fantastic historically strong year for the Thule Group. We have never ever grown as much, and we've never ever delivered as much on both EBIT and top line performance. So I'm extremely happy with the year as a total.So let's go to Slide 2, where we will talk a little bit about then summarizing the fourth quarter as well as the year from a some financial parameters before we begin to some of the more financials. If you look at it, 2021's fourth quarter has to be, of course, considered to be compared to an extremely strong comp quarter in 2020. So to remind everybody, you know that the season was delayed in 2020. And we, therefore, had both the right type of products in terms of higher-margin products being sold later in the year than normal and also truly a volume of sales that was happening later in the year after a spring lockdown period.Despite that strong comp, we grew sales with 14% currency adjustment. And when you compare that with the fact that we actually grew then the fourth quarter '21 more than 62% compared to 2019 fourth quarter, you realize what a strong quarter we really had. Europe and Rest of World grew 8% and Region Americas grew 27%. So a strong continued performance in the Americas region. If you look at versus '19, the growth rates are more similar, but overall, both regions and actually all the markets in both regions doing very well. The gross margin in the quarter was lower than we would have liked, and we already talked about that in our third quarter call that we had to realize that the price increases that we implemented midyear 2021 would -- were not enough to compensate the cost increases that came towards the second half of the year.On top of that, you all are aware, as we have said a few times that we decided to target to take market share and meet volume increases even if it meant more costly decisions in our own plans. As you all realize, there has been significant sick leave absenteeism due to the various pandemic situations and quarantines and rules. We have, despite that targeted not only to do a 14% sales growth versus 2020, but also to build up our inventory levels significantly ahead of what will be a very exciting 2022. Therefore, we have been running our plants at very high output pace despite then the significant challenges in terms of absenteeism. The combination of the higher raw materials, the higher freight costs and that effort on running to capture the volume, on top of then not having done enough price increases is why the margin is lower than 2020 fourth quarter.It's also lower because, as I said, the exposure of which product categories, we specifically in the year of 2020 in the fourth quarter sold where we had a higher share than normal of high-margin categories like our bike carriers and bike trades being sold very late into 2020 with a lot of sell through all the way into Q4. While we in 2021 had a more normal phasing in terms of share of sales of the various categories and therefore, had a higher share of some lower gross margin categories like RV Products and Packs, Bags & Luggage in the fourth quarter. So when comparing EBIT margin with past years, we have to say that we are actually quite happy with the performance because we have historically been on mid-single digit in the fourth quarter.So strong overall performance for the full year is the key to remember. It is by far the best year ever in the company. We grew 38% currency adjusted in 2021 with 34% in Europe and Rest of World and 48% in Region Americas. We also delivered that with a very strong EBIT margin well above our financial target with an EBIT margin of 22.5% and an EBIT of SEK 2,340,000,000. We have generated a positive cash flow also in a year where we are aggressively building up inventory and aggressively pursuing CapEx expansions for the future growth. So despite those efforts, we still generated over SEK 1.1 billion in cash flow, which is also enabling the Board to propose an ordinary dividend of SEK 13 this year. So overall, I'm very positive on how strong the year has been from a purely financial point of view.If we go to next slide, Slide 3, I can also say to you that we are very pleased with what we've been able to achieve from a sustainability perspective. In our annual report, you will see loads of various measures that and tracking on all the various parameters from a sustainability perspective. But of course, one that is a little high on everybody's agenda is the greenhouse gas emissions. And I'm very proud to say that despite a very challenging supply chain world out there with lots of extra shipments, a lot of extra air freight and things to cope with the challenges in getting things in, we were able to both on a total perspective in greenhouse gas emission reduce it with 1%. But also from more importantly, if you look at it in terms of compare to revenue significantly reduce our greenhouse gas emissions with actually up as much as 30% -- 26%.So I'm very happy that all the good efforts we've done over the last few years and the continued efforts we're doing is also paying dividends from a sustainability perspective. If we then dig into the financials, I will leave it to Jonas to walk you through some of the more financials for the fourth quarter. So over to you, Jonas.
Thank you very much, Magnus. We are now on Slide 4, and I will, as usual, concentrate on the quarter. I would like to start by saying a few words and stress a few points that Magnus already said about the comparison period. Q4 2020, which as you may remember was quite exceptional with an EBIT margin of 15%. The normal level for the fourth quarter in any given year before 2020 has been an EBIT of 5% to 6%. And the primary reason is that, that it's simply a smaller quarter.If you recall, 2020 the first COVID year, we went from a low level in April when the pandemic hit to overheating in the second half of the same year. The entire seasonal pattern shifted in 2020 giving strong bike carrier sales in the fourth quarter. That, in fact, looked more like a normal strong third quarter to us. That is why we had this EBIT margin increase of 10 percentage points between Q4 '19 and Q4 '20. This is the quarter we now compare with and the EBIT margin in Q4 '21 of 10% should rather be compared with the 5% that we've had in all years, except 2020 as we're now returning to more normal seasonal pattern. As Magnus also said, we increased the sales by 15% in the quarter, primarily from volume increases. However, the gross margin has been impacted by the higher material prices as well as by the increased transport cost, as Magnus also mentioned.The gross margin in the quarter was 34% compared with 40% for the same period last year and 38% in 2019. We have been running our production at high levels in the quarter to build up stock ahead of the new season, and I will come back to the stock level in a minute. We've been able to offset some of the EBIT margin reduction in the quarter by capturing economies of scale. If you compare SG&A cost to sales, it's gone down from 25% in Q4 2020 to 23% Q4 2021. The finance net in the quarter continued on approximately the same levels as in previous quarters of 2021. The tax cost in the period and the full year amounts to 22.3% and is well within the guided range of 22% to 25%.If we now move to the next slide, that is Slide #5, which is operating working capital and cash flow. Operating working capital was SEK 2,326,000,000 at the end of Q4 '21, which is considerably higher than in the previous year and relates to the increase in inventory. Last year's level was too low in relation to the increased demand volumes that we saw at that point. And this year, we decided to be well stocked ahead of the season to be able to catch the demand levels we expect during the spring and to be on the high delivery capability that is part of the Thule business model.As you can see on the slide, the level of accounts receivable is not high and represent 1 month sales. The overdraft situation in accounts receivables is also on quite normal levels. The increase in inventory levels is planned and was also communicated last quarter when we said that we were in the process of stacking up ahead of the new season. The increase in inventory and the increased level of investments in production capacity have, of course, had an impact on the cash flow in the quarter. The operational cash flow was minus SEK 381 million in the quarter compared with plus SEK 371 million in the fourth quarter last year.Capital expenditure was SEK 156 million in the quarter to be compared with SEK 54 million in Q4 last year. For the full year, investments have gone from a level of SEK 170 million in 2020 to SEK 503 million in 2021, and it relates to investments to increase our production capacity. The investments have been in our plans but executed earlier to meet the increased demand levels in the market.Thank you, and then I'll return to you, Magnus.
Thank you very much, Jonas. If we then turn to the next slide, Slide 6, we'll look at the sales by quarter. And the reason we want to do that is to highlight also that sometimes when you do this error of just comparing with previous year, you miss out on some of the anomalies that might have been the previous year rather than this year. We have, therefore, decided internally continuously as we see a return to a more normal seasonal pattern coming now in '22 to look consistently during the pandemic at comparing also with 2019, not only the very abnormal 2020. So looking at the quarterly sales development, you can see clearly that we've had a very strong development versus 2019 across all 4 quarters with 45% growth in the first quarter, 48% in the second, 75% in the third and 62% growth in the fourth quarter.So a fantastic performance versus pre-pandemic in all 4 quarters. As we now look ahead at 2022, we actually believe that this will normalize even slightly further because, as you know, we have commented that we did not enter 2021 with enough inventory on hand to capture and deliver when the consumers really absolutely would have liked and preferred to have the product, which was earlier in the season. We will therefore -- we are expecting to see, therefore, in 2022, a more heavy load and strong performance earlier in the year as we have now geared up, both in terms of inter levels and production capacity to capture the demand when it happens in the spring period.If we go to the next slide, we summarize the performance by the various categories in the 2 regions. And very happy to say that when you look at the sales development, both by region and by product category, it is green everywhere. There is no red numbers in our business. And it's always nice when you see growth across all parts of your business and in all markets. The growth has been phenomenally strong in our Sport&Cargo Carriers, which I will speak soon more about, but also growth in all the categories. Of course, the one with the easiest comp is the Packs, Bags & Luggage category, but it's still nice to see that we did see some solid growth also there in 2021.If we go to the next slide, we will talk about the various categories and we start with Sport&Cargo Carriers, the biggest category representing 66% of sales in 2021. And what is very positive to note when we look at that Slide 8, you can see that we had 43% currency adjusted growth, with strong growth in both regions. We grew thanks to the same things that we've always been doing well. Great products, a very strong global brand and a very flexible supply chain. I mentioned a few times that we did not deliver to the same high On-Time-In-Full next day delivery approach that we normally do, but we did it better than our competitors. And we are now gearing up to be able to back at our high normal service levels in '22.If you look at what we were further boosted about, you've heard about the biking trend and the biking boom in the market. And yes, bike racks was a very strong performing subproduct group within Sport&Cargo carriers, and we had a very strong market momentum for all bike-related products in all major markets. But I'm happy to say that also extremely strong performance in both roof racks, roof boxes, roof top tents as well as water and winter sport products. So it was across the entire portfolio, as consumers chose to do active vacations and active weekend activities with bringing their gear and their car with our products.When looking forward now then in 2022, we definitely are convinced that we will continue to drive growth using the same core strengths. We have built up our inventory levels at the start of the year. I've mentioned a few times, and I reiterated now that we feel very comfortable with our inventory levels and capacity in Europe. We are still a little bit behind in North America and 6 months after in terms of buildup, but we have a higher capacity than ever, and we are building up that ability to have a great service level in North America as well.We are quicker than our competitors' act. Most of those competitors source in Asia's [ fully ] final product, while we have our own assembly plants close to the market. And we're, of course, with those investments we're doing, both at our suppliers and at our own plants, more capable than any other to capture those demands that we are actually convinced will come in 2022. We will continue to work across that portfolio of that offer, and we feel very comfortable with our main core category starting off 2022 in a very good way and being a strong year also in '22.If we look at the second biggest category, RV Products. And RV Products on next page is then 14% of our sales in 2021. And we grew that with 34%. The vast dominating share of RV Products sales in the Thule Group is dedicated to the European market and Region Europe and Rest of the World stands for more than 95 -- almost 95% of sales. And in that region, we grew with 30%. What is very nice to note is that those niche, more premium product categories that we've targeted towards the more smaller premium van segment where we believe we have a strong product offer and can make good gross margins when we sell our products and nice profits. We saw a growth on 113% in those niche categories in Region Americas.So what happened in 2021 in the RV Product category? Yes. You are all aware of the strong consumer trend with more young couples wanting to have that small van to live and travel in their own little personal bubble or to be active and going, surfing one day, mountain biking another day and sleeping by the beach in their small van. There is also a continued strong trend with a 55-plus, my own generation being more active than ever and utilizing motor homes as a flexible way to travel around in Europe. And there is a continued huge demand for these vehicles.What the biggest challenge has been at the second half of '21 and will be, as I'm sure you've heard from some of those motorhome manufacturers as they've had their various quarterly calls is that there will be a challenge in terms of getting enough chassis to build RV's home on. So motorhomes has a very strong underlying market demand, but the manufacturers of the vehicles are struggling to meet those demands because they are simply not getting enough motorhome chassis to build their motorhome zone. So that will be, I believe, the biggest challenge in 2022.Demand is great and the challenge will be not ours as much as the motorhome manufacturers in being able to capture as much of the upside as possible. We will still believe in a positive performance from the Thule Group, and we are in our own business ramping up our capability to service, but it will be a -- versus other product categories, a more shaky due to what's going on in the general market in terms of motorhomes.If we then look at the third biggest category, Active with Kids on the next page. Active with Kids, 12% of our sales in 2021 and another very strong year in this category. And with a growth of 33% in Europe and Rest of World and 43% in Region Americas. You all understand that if you are a big provider of bike-related children's products, it is likely that in a biking boom with commuting or biking and biking in general, we will do well. So that is absolutely the case.We are growing with the world's best bike trailer portfolio, and we are seeing a very strong momentum, which we've seen for years, long before the pandemic, and we are growing very nicely with our child bike seats. But what is even nicer to note one category that did not get any shape or form of help from the pandemic, our stroller category was the fastest-growing product group within Active with Kids where we now have 3 well-established models in the market that all grew in a nice way.So when we look at 2022, we are targeting and expecting to continue to take market share with a broadened offer and distribution. In '22, we're launching 1 new bike trailer model and also our fourth stroller model, actually the one pictured in the image on the page, a from birth stroller called Thule Shine, which has both a bassinet and other solutions as well as the seat when the child grows. If you look at that offer and our brand within the Juvenile channel, we are starting to become a very serious contender, and we feel very good that we will continue with a strong momentum of continued high level of growth within Active with Kids in 2022.And then finally, the smallest category, 6% of our sales, Packs, Bags & Luggage. Yes, a very difficult 2020 for any company in the Packs, Bags & Luggage category. So we do recover from what it was a weak comp, and we finally returned to growth with a growth of 12%, with Region Americas being ahead with 17% growth. And that's not so strange when you think about and consider a tracking how much people travel and have gone back and forth on traveling in Americas versus Europe and especially Asia where travel has been much more restrictive. Region Americas and North American, especially U.S. domestic travels grew quite fast from very low levels of 20 in 2021.So if you look at '21, you can really say that we had one very strong performing category. It was what we call our sport bags and tech packs. So as you would assume, every other category that was associated with an active outdoors close to your home did well. So did hiking packs, bike hydration packs, bike bags, et cetera, all of those type of products did really well for us in 2021. If you look at our single biggest category is what we call the everyday bags. So those are the small backpack that somebody brings their gear, their computer and some other stuff back and forth to campus or back and forth to work.And as you all know, most campuses were closed or were at least partly closed. A lot of workplaces did not allow their colleagues to come back into work, and that has then meant a challenge for that whole category to perform well as people were not buying up new stuff as they weren't traveling as much as back and forth commuting to work. And of course, the travel sector is still at extremely low levels, especially in Asia, but also in Europe. Slightly less bad, if we call it like that in North America where actually it picked up quite a lot in '21 versus the extremely low '20.When we look at '22 then for this category is it's not only Sweden, where people are back -- allowed back to work. Now here in where restrictions are eased now this today. There is around the world, a lot of easing on various restrictions. We believe, therefore, and are seeing signals that the everyday backpack type of world is becoming more and more normal and it will help that category. We still see the trend of a active outdoors in an active environment, and we will do well in our sports bags and tech packs. And in luggage, the travel sector will be slow to recover, but it will be recovering. So from a low base, we will see some positive market momentum.If we then move on from the categories to our fantastic Thule brand. On the next page, you can see that 88% of sales was from the Thule brand in 2021. So we continue to do fantastically well if you look at the top line growth in total and then realizing that also the Thule brand continue to take share. The Thule brand is now doubled in size in sales, what it was 4 years ago. So a phenomenal performance of what is truly becoming a global lifestyle brand. Very happy with all the efforts we are putting in behind that brand in terms of social media, our own home pages, how we work with retailers, both brick-and-mortar and online to further promote and build that lifestyle brand.And then in closing, let's talk a little bit about forward direction in 2022 focus on the last page. We will continue to drive our current and very well-established, growth-oriented strategy. That growth-focused strategy remains unchanged. We are not changing our approach. We will, however, as you know, and did already implement price increases above and beyond what we normally would do because of the cost increases that happened in 2021. So we have implemented new price increases to reestablish the margin levels we want to be at. But aside from that, you can see that it's the same momentum that we've had for a few years.We will focus on product first. Product is king. We are continuing to push our efforts with those products. But we will also continue to build that lifestyle brand with its motto "Bring your life" and continue to spread the wings that way to create a consumer base that is loyal and returning to us. We have a very strong back-end organization and it will enable us to cost efficiently see those economies of scale handle that growth that will be coming. We will also continue to work as we've done in the last 2 years with more and more digital sales tools, but also physical for brick-and-mortars to ensure that they sell out products well. And we will continue to steadily roll out a growth of our own direct-to-consumer sales.Product development is key to our future and product portfolio approach is key to our future. We will continue to spend around 5% of sales to fuel that long-term growth and the expanded Thule Test Center will be opening up for business now in April. It's a very well invested SEK 80 million for all those various products we will be testing, both new and old. And we feel that we truly have a world-class development and test center facility. As we mentioned a few times, we will continuously improve in our supply chain setup. We are at a higher CapEx level than in past years. That is, one, to catch up with the demand in quantities we already need to have, but it's also, of course, prepping for future growth. And that means both in our plans, in our DCs, but even also in development facilities, we will continue to have an above-average CapEx in 2022.We are dialing up our automation focus. We've been doing that a few years, but as we are growing, that becomes even more important. So there is a number of major investments in production lines with higher automation grades. And that is a key part of that capacity expansion that we are doing. As Jonas said, we want to be back to our high service level of high On-Time-In-Full with very short lead times, which has always been one of the strengths of the Thule Group. Together, that means that we are confident that we will have a very strong cash generation that will enable us both to continue to drive top line growth as well as strategic M&A and as well as increased dividends for the coming year.And as a closing, I think it's important to remember, there are many uncertainties around the world, and we are not underestimating those. I'm sure you've been all hearing and talking to friends about the Omicron in the last few weeks, making absenteeism being at record high levels, et cetera. That's just part of the game we have to play these days. We are coping very well with that, and we are proving once again as we did in '20 and '21 that we are nimble and fast to act flexible to handle those challenges that will be around, and there will be many of them in terms of constraints in both supply and challenges with various pandemic measures as it we did in 2021.And then finally, we are very much looking forward to our Capital Markets Day in May, where we will actually introduce 2 new product categories to you. So I thought that would be a good hook to end the meeting with the fact that it's not just 1 new product cater, we will introduce in May. It's 2.And with that, we move on to the last point of questions and answers on the next page, so opening the floor.
[Operator Instructions] Our first question comes from the line of Daniel Schmidt from Danske Bank.
Magnus and Jonas, hope you can hear me. A couple of questions from me then. And starting off with the product mix that you do touched upon quite a bit in the presentation. And it's, of course, clear that, that it's been quite skewed during the pandemic, but you were talking about sort of a normalization of seasons, and that will continue into 2022. And if we would see sort of a continuous opening up of societies, which seems to be most likely now and people started travel and you see a sort of a quite a good swing back in your Packs, Bags & Luggage business, how much do you think that will impact the gross margin? Or put it this way, how much do you think that you've benefited from a favorable product mix during the pandemic?
Daniel, yes. Honestly, if you look at the size of Packs, Bags & Luggage, you realize that it's 6% of our sales. So even if there is some gross margin differences, a small shift in that doesn't have a major impact on our total performance. I'm therefore very confident that we will continue to have very high gross margins in 2022 as well.
And sort of given that scenario, which you're alluding to, where do you see sort of what should be the base when we look at the gross margin, you think given that it was a little bit more elevated in 2020? Was that exceptional than you think? And the one that you reported in '21 and '19 is the normal sort of gross margin even if we would see the sort of mix shift continuing to normalize in '22?
Yes. I mean our ambition is always to ensure that we have a very high gross margin. And always, there is an effect of economies of scale also on gross margin because you do have some fixed production overhead costs. So with a strong top line growth, where our ambition is to increase our gross margin versus what we had in 2021 because you know, as we've mentioned a few times and especially it was clear in the fourth quarter, we did not raise prices enough versus the cost increases, which hurt the margin in the second half of the year. So if you look at the first half of the year, I think we had good margins in '21. In the second, we did not because we didn't do enough on the pricing.
Yes. Okay. So you're saying basically that these price hikes will more than neutralize a normalization on mix basically?
I always say, you said price hikes last call also, Daniel.
Price increases.
I'm very keen to point out it's a reasonable price increases as to the market.
Okay. And following on that, and given what we talked about during the summer and you made these price increases at the start of July, but you also highlighted that you did have a backlog, and there was orders placed before the 1st of July that you needed to deliver on the old pricing. How do you view that going into the start of this year? Is the situation around the same? Or is the sort of backlog a bit more normal now and less of effect on that topic?
So we feel very good in Europe. It will impact positively directly. As I mentioned, we have done a good job in ramping up capacity and building up stock levels in Europe. And as I mentioned also, we are a bit behind in North America because we haven't been able to fully ramp up. So if you look at the effect, I feel very comfortable that the pricing effect is immediate in Europe, and there is a little bit of delay in the full impact in North America.
Okay. And do you feel that sort of we haven't gone that far into this year yet, of course, it's only been 6, 7 weeks. But the price hikes that -- price increases that you did implement, I assume, was by the 1st of January. Has anything changed in the underlying reasons for that increase versus what you expected at the year-end?
No. We feel good that we have done the right price increases. And now, of course, what we will have to monitor because the world has been more volatile than ever in the last 2 years. We will need to see what goes on in the spring time. We have already announced early during 2021 that in 2022, we'll have 2 occasions where we potentially do price increases on our products. So we've already announced to the market that this is not a full year price. It's a first half year price because we wanted to have a clear communication with our customer base that if costs continue to develop in a wrong direction for us, we will need to pass on those cost increases as well. But if you look at where we stand today, we feel right about what the price increases we did.
All right. Good. And just finally, on the product launches that you mentioned, 2 new categories. So should we interpret that as those categories being at your sort of dealers/retailers by the summer? Or is it more that it's now being introduced before the summer at sort of exhibitions and those will be in the market later in the year? Or what's the timing?
They will only be in the market in '23. So we are announcing them to trade in '22. They will only be sold to consumers in '23.
Our next question comes from the line of Karri Rinta from Handelsbanken.
Firstly, about Sport&Cargo Carriers, which is, as you say, our biggest category and the one that grew the fastest in 2021. So now looking ahead, this sort of help us support from new entrants. It's probably going down quite a bit given that the pandemic is receding. So I wanted to ask more specifically about how do you plan to work with this larger installed base that you now have after the pandemic and any specific strategies for 2022 in this category. That would be very helpful.
Yes, Karri. It's not really a specific strategy. We believe actually differently maybe than you that there is a lot of people that are still getting their bikes that didn't get their bikes in '21. There's a lot of people that didn't get all the equipment and all the gears. There will be a lot of people doing local vacation and that don't feel 100% inclined to do all their vacation bookings for international travel already this year. And there is a lot of people that have positively been surprised about how nice it was to do some of those local vacationing versus necessarily flying half the way around the world.We are, therefore, very positive about Sport&Cargo Carriers in general as a total market momentum, and we're even more positive about our capability of really delivering when the consumer wanted the product, which we will do better than our competitors I'm sure. So we see ahead of us a very positive year for Sport&Cargo Carriers in total. We will always continue to do other efforts in terms of how we communicate and how we reach out to the consumer base and product launches, et cetera, but that is nothing different in '22 than we've done in past years.
Okay. So this phase of pull forward that you hear quite often, which means that there was a lot of pandemic-driven purchases in 2021, and that's why that will go down. It's more about supply chain disruption has pushed these sort of volumes forward. And that's why you can have this sort of solid outlook at least for the first part of the year?
Absolutely, I agree with you. And there is, I believe, maybe differently from what we see then -- and that's up to each person, it's difficult to forecast the future, right? But we believe there is a stronger positive market momentum less of a temporary effect in this trend because there was a trend already before the pandemic. And it wasn't like half of the world all of a sudden started biking in, if people seem to believe that. It wasn't that many more bikes that were sold, but there was a positive momentum and people with more activity. So you're right. We are believing that the disruptions, delays, et cetera, means that a normal return of a season also is that we should have a very strong first half of the year.
All right. Good. And then about Active with Kids there, the -- I mean you had strong growth even before the pandemic. I think you have grown by in double digits quite some time. And you outlined which new products you would launch this year. But I was curious about this sort of increased distribution and maybe more so. Would you expect to put sort of more effort in the -- in your own digital distribution in Active with Kids than what you do in some other categories? Or when you look at your own direct-to-consumer sales, do you see Active with Kids being overrepresented or underrepresented in those sales?
If you look at it actually, it is slightly overrepresented. It's not dramatically different. And the logic is, of course, that RV Products, you do not see in our direct-to-consumer to any great extent because as we often mention, it's a type of product that they often want a dealer or somebody else to attach to your motorhome. So if you take out that share, you then can see that, of course, by default, the other product categories will have a greater share. But also we even sell Active with Kids take a slightly bigger approach. And what we are doing in terms of our communication in various social media and performance marketing efforts, there is a greater share of spend in driving that in Active with Kids. And so we expect our growth pace will be highest in direct-to-consumer within Active with Kids.
All right. Perfect. And then finally, these 2 new product categories. Are they -- are both of them for an existing Thule customer? Or is there an element of sort of a new customer's segment opening up with any of these 2?
It's always a definition of what is a customer segmentation. It is products that fit the brand. So it is people that want to be active and bring something. I don't mention what it is. But I, therefore, would say they are in the same universe. It might have been people that for what they were doing, not needing to buy some other Thule product. But now with these, it fits their interest on what they want to be active with more, but it's the same type of consumer. It's not going to be a big diversion from the brand. It will feel very logical, I think, when you hear the categories.
Our next question comes from the line of Gustav Hageus from SEB.
If I might start on the 2022 outlook. In a situation, Magnus, we are not growing volumes in 2022, do you still expect margins to be maintained here at the current run rate of 22.5%?
If you look at it, first of all, I'm convinced we will grow volumes. But even if we wouldn't, we will be running at a very good and high EBIT margin. I wouldn't be able to say if it's exactly 22.5%, but it is a very high EBIT margin also even if we wouldn't grow our top line, which we will significantly.
And on the top line, would you expect sort of mid- to high single-digit growth also if the top line does not grow via volume? Is that a fair assumption?
I mean, we've communicated that we've done high single-digit price increases. So even if we sold exactly the same amount, we will get high single-digit growth by just selling the exact same quantities we sold in 2021.
Right. Okay. And a few nitty-gritties to the R&D to sort of R&D investments 2022 versus 2021. Do you see that being maintained or…
We will spend more monetary amounts than we did in 2021 because we are doing more efforts in more new categories. But if you look at it as a percentage of sales, it will all be dependent on how strong the top line growth is, of course, but relatively similar levels in terms of percentage of sales, but more monetary amounts.
And could you remind us what that percentage is roughly now?
It's 5%.
All right. Perfect. Okay. And lastly, on the RV, sort of what you see now in the market, do you expect volume growth also in the RV category despite these supply disruptions amongst the way [indiscernible]?
I feel very comfortable that we will continue to take market share. And the biggest question therefore is this how many chassis will the manufacturers get. If you look at the indications, there have been different ones in the marketplace already from some of the companies that have done their views on what the market will do, but there is going from flat to slight decline to slight growth. There are various speculation. I'm not in any doubt that we will take market share. So I believe we should be able to grow top line also in RV Product.
Our next question comes from the line of Fredrik Moregard from Pareto Securities.
So first of all, the question on the gross margin here in the fourth quarter. A number of factors that you mentioned, normalized mix cost inflation, absenteeism, et cetera, impacting that negatively. Is it possible to size these factors up against one another? Which one is the major mover of that bridge?
Absolutely. The major mover is that costs in terms of material costs were higher than we did the price increases or cost increases of materials because in the first half of the year, we had some of those costs that were from 2020 late, et cetera, that were lower. So in 2021, material cost and freight cost is the biggest impact on that margin. The second biggest is the -- is product mix differences with the at the normal 2020 then, where we had a lot of high-margin product categories sold in Q4 with bike trailers, bike racks and other things and very low quantities of Packs, Bags & Luggage, for example. And then you have our decision to actively pursue top line growth both for 24 -- 2021 Q4, but also to prepare in terms of building up the inventory has meant that we've run many ships, many weekends and with a lot of temps and more than normal due to absenteeism. So if you combine our push and the level of absenteeism, that's also significant, but that would be the next one.
All right. Perfect. Now when it comes to SG&A, you discussed the R&D just now. I guess other factors coming into that would be investments in your D2C business marketing, et cetera. Are there any specific areas that you're looking to invest increasingly into 2022 that would drive SG&A?
Yes. If you look at it, you're right, we will continue to dial up our D2C efforts, but actually, we've built out that organization already in '21. So in general, if you look at staffing levels, a lot of those people that we honestly would have loved to have earlier in '21 because it's been, as you've seen on the top line growth, a lot of work in a very complex reality. And we've been running slightly lean in the beginning of the year staffing level. They were coming in in late in '21 and they're key now as we go into '22 to deliver that strong top line growth.So it is, as you said, in the D2C teams, it's in performance marketing. It's in a little bit of the logistics management around those things where we are adding some staff. While we are very well set in terms of IT, finance, admin and all of that, we have a very scalable crew, so to speak, and one global system, all things like that. So there, we don't need to scale up. It's more of those targeted efforts in the D2C and in some of those new product management and marketing roles for the new categories we're about to launch.
All right. All right. Then just the last question on the new categories. I believe you previously said that when we were talking about just one category being announced in 2022 that it was not a subcategory to any of your existing Sport&Cargo Carriers or Active with Kids, but a completely separate product category. Is that true also for the second category that you are planning to launch?
Yes. Both these categories, we will have an ambition that as we've said in the midterm, which in real terms is then 5 to 10 years, which you can then say, by 2030, we would have the expectation that these both -- each one of them should have the ability to release the EUR 100 million in sales for us.
Sure. But just wondering if it's sort of an expansion within one of your current product categories, i.e. sub categories in Sport&Cargo Carriers, Active with Kids? Or is it a completely new product category that we're looking about [indiscernible]?
It's all -- everything is a definition, what is new. As always, you could say, was the roof top tents new or was strollers new, when you did buy trailers. I think it's clearly not something that we do today. It's clearly a 0 cannibalization and a 100% addition.
Our next question comes from the line of Mats Liss from Kepler Cheuvreux.
So first, probably a couple of ones. First, regarding the market share gains, you indicate you had had them in several areas. But looking at the group as whole, I mean, did you have market share gain in part of the sort of problems with [indiscernible] that hampered your say it's -- during the year or would you sort of [ lose ]? Well, could you say something about that, please?
Absolutely. I'm very calm to say that we have gained market share in every single category we are in. And then mainly, so it was actually that in a very complicated and challenging supply chain reality, due to our historical structure of how we run the supply chain with local assembly in and close to our main markets and a very targeted flexibility approach in our company and a very strong and dedicated supply chain theme, then I definitely want the team that I want to pass on my thanks to. They've done a tremendous job in using our strengths in actually being better to capture the demand upside than our competitors were. So we being utilizing our strong brand and our sets up in a supply chain to capture more of the upsides that were offered by a high demand.
Great. And then just maybe off to sort of philosophical one. I mean, you have had seen this strong interest of outdoor activities and I guess growth has been very good. And do you expect to see new entrants coming into -- I mean, you were trying to expand your offerings to some extent. And do you expect to see new competition coming into the market from -- well, other sort of consumer related brands?
Absolutely. I think every category that is doing well, there will be companies that have a logical reason to say, I could also maybe add this category into my portfolio. And as a brand and as the company makes it sense in the market, I -- it would be strange if there wasn't a big interest. Luckily for us, I have to say that if you look at Sport&Cargo Carriers, it's a very, very complicated category to get into with a lots of development cost and a lot of certification costs. So within Sport&Cargo Carriers, I see that as not very likely. If you take RV Products, similar situation. There are a few big global players. I don't see any new, completely new player coming in, in any big extent.If you look in Active with Kids, slightly differently, there's always been historically new brands that have popped up and been successful. Some of them have come and gone. Some of them come and remain. So I definitely think there will be brands trying to enter in always as in the past. Nothing different in the pandemic within the Juvenile category. And if you take Packs, Bags & Luggages, definitely the category the lowest by far threshold of entry. So of course, in those more bike oriented, high oriented, more outdoors-oriented bags, you're seeing loads of brands already trying to move themselves quickly in there, either clothing oriented brands wanting to add some products or maybe not so outdoorsy brands that want to package themselves as a little bit more outdoors to get trendy and maybe get the investment community to listen to them. So there, I think there will be more movements. But in the other 3, nothing really major difference versus the past.
Great. Sounds committing. And I had a try on these new product categories that you are sort of launching now this spring. And do you sort of go into an existing market? I mean it's not a new type of product that's -- or, yes [indiscernible]?
It's a new type of products, but it is -- there is a logical sense, both in terms of trade and in terms of brand recognition, I feel very comfortable that most people will say, I guess that I was right. Maybe people won't be right on both and maybe they weren't 100% right, but they -- it's not going to surprise me.
Yes. And it's already a market that exists. There are competitors in that mode?
Yes. We're not a completely new. We're not going to create -- we're not revolutionary. It might be boring to admit that as the CEO, but totally definitely a very strong evolution oriented company. We do great products, and we do them better than most. And we continue to grow, but we will not create a brand new market. There are players there. We believe our brand and our ability to develop great product will have a good likelihood of success to become a significant player and a podium contender. Otherwise, we wouldn't consider the catalyst.
Great. Yes. And then book keeping ones here. Of course, the price increases you have implemented at year-end now, did you experience any sort of a pre-buy impact ahead of that?
No, because generally, us and most players in the industry haven't had that capability. Capacity-wise, we've struggled to meet demand, even us as we admit it. So there wouldn't even have been that opportunity. And I think most retailers realized that, that was the same for everybody. So it's not, as I pointed out, and Daniel corrected himself, I heard now that we didn't do any hiking of prices. We did very reasonable, very logical price increases that most people in the industry are doing as material costs have gone up so much. And therefore, they will be passed on to consumers in the end. I see no doubt in that. And therefore, there wasn't a lot of significant pre-buy so to speak.
Great. And then you mentioned the sort of raw material impact area in the fourth -- sorry, in the second half. And have that sort of and they -- well, made you sort of change the hedging policy or something like that, that should be more expected going forward?
No. Honestly, the only raw material where there is any real opportunity for us to do any type of hedging is aluminum, where you have an LME hedging opportunity to tag it, so to speak. The rest of our business isn't a type of business where you can hedge your buy. So you slowly but surely move with what the market happens.
Good. And then the final one on production. I guess you invest in automation and so on. Will this mean that during your time period, you will run double sort of production lines to some extent and have had a [indiscernible] [ much ]…
No, not really. So what we're -- yes. What we're doing there is we are -- when we are doing new models or new expansions, they are more automized, but it's not like we're running 1 inefficient or 1 an efficient new one. If the new one is up and running, it replaces that one. On some of our models due to the life cycle point they are in, it wouldn't make sense to build a brand-new automated line because the product maybe wasn't designed to be super automated some years ago, and it might be nearing its end of life. And therefore, we won't do automation. It might be a product with very much lower quantities.As you know, we have a pretty broad product portfolio, some very high-volume runners and some lower volume. We need both of those type of products to serve the market well. In some of those, it simply doesn't make sense. It would be more costly to do too much automation, but it is on the high volume of newer products that we're definitely dialing up the automation significantly. Already at the onset a few years ago, when we started those development projects, they have been developed, conceived and conceptualized with automation in the forefront.
Our next question comes from the line of [ Age Fang ] from SPRG.
Well, I have some questions regarding the production capacity. We noticed that you've mentioned you are investing to do additional production capacity. So I'm wondering is there any specific product category it's for? And I also want to know the estimated increase and when it will complete in queue.
Yes. So if you look at it, it's in the 3 just categories, all of those we have own assembly. So we are doing investments in capacity in Sport&Cargo Carriers, RV Products and Active with Kids. For Packs, Bags & Luggage, we are sourcing those products. So there, we do not do those type of investments. If you look at it in terms of CapEx expenditure, that is also including some of the building expansions, et cetera. But generally, you can say that we are running around 5% in 2021 of sales, and we will be doing that in '22 as well.Historically, we've been around 2.5. What we're doing now is partly catching up with capacity increases that have been above and beyond in our plans. So really, it's not new that we've come to think about now. It's more an anticipation, as Jonas mentioned, of already planned increases in doing it faster and building out our capacity faster. So in across all those are the 3 biggest product categories and the CapEx spend is going to be around 5%. And many of them have already started to come in place late last year and early this year. So in many cases, those are already in production, so to speak.
Our next question comes from Peter Testa from One Investments.
It's just I'm extending on the last question. If you look at the inventory decision you've taken and maybe just to help understand into your view on 2022. When you look at the retail access that you've gained year-over-year in your major markets, is there anything particular you would highlight in that regard? Some context for access or major client startups going into the new peak season that you are now able or preparing to serve?
Actually, it's not a major difference in who we're serving. We're just going to be back at serving them at the type of level that we spoiled them with in the past. One of our strengths was always that retailer did not need to plan very much because we were always able to deliver the next day to them whatever they ordered at a very high On-Time-In-Full performance level. Then as the pandemic struck, we first had issues like everybody else with plants being closed in the spring of 2020. Demand became very fast, very big. Even if we try to ramp up and try to have our suppliers ramp up, we weren't fully meeting the demand.And we then, you can say more or less from June 2020 until very late last year in Europe and still partly in North America have been running a little bit behind in enabling that very easy life for retail. When you got it, you can always -- when you need it, you can call Thule. So it's not that we're going to serve new retailers. We're going to serve those retail doors we've had better. Of course, in a category like Active with Kids, as I mentioned, we are opening consistently and continuously new retail doors because we're becoming a bigger and bigger player but it's not a major new thing. It's some new retailers in the same type of universe. It's more about servicing better and in the level we used to do.
Okay. And then sort of related to your point on supply chain and timing of capacity we asked before. When you think about going into this peak season, to what extent did you look at your supply chain and say, "Well, they're going to be constraints, we better get going and building and" or your own capacity and say, "We feel there are certain products and product lines we will face constraint in high and peak season?"
So we do that all the time. We started doing that already in -- we did that before the pandemic, and we definitely needed to do it in the pandemic. But even when we did it in the pandemic, it was very difficult because tooling, for example, for a sub, we own the tools at all our component manufacturers and then we do final assembly and assembly plants. That's our setup. But even to get a tool to do additional output and tool owned by us, but sitting in an injection molder somewhere in Europe, close to our plant, was extremely long lead times. So what we've struggled with wasn't the foresight or the insight in where we wanted to have a higher capacity. It was just that it was much slower to get to that point.And luckily, we were then in contemporary challenged with a great demand all the time in the current situation. It was only towards the very end of '21 that we started to feel a lot better in Europe, having already done a lot of work with our supply base and our own plans that we were starting finally to build up inventory levels again in the last few months of last year, making us feel smartly better situated now to capture upside in demand in '22.
Okay. And so when you think about capacity flow -- your capacity flow from the investment step up last year and this year, how do you think it phases into this year in terms of when you feel you'll get the significant step-ups for capacity?
We already have been stepping up because otherwise, we wouldn't have been able to sell 62% more than we did in 2019 in Q4. It's obvious that we have never -- and in any given week, we've always put out a lot more in the last 18 months as well than we did in the past. And that's continuing on a weekly basis. More output capacity is being added consistently all the time and has been in '21 as well. So it's not -- I wouldn't call it a step change. This has been a very hard for gradual change where we feel really comfortable in Europe now. We still admit that we are a little bit behind on that gradual change in North America capacity output and not that we are not producing more, we're producing more than ever, but we would have liked to be able to produce even a little bit more, and we're working on that to also catch up fully in North America.
Okay. And last question, just on the price increases. When you talk about price increases being reasonable, just are you talking 3% to 5%, 5% to 8%, 8% plus? I mean just to get some context on what that may be.
So high single digit is what we said. So that means it's definitely closer to 8% than to 3%, right? So if you look at it, what everybody has had to do, not just only us, is, of course, clearly the case that input materials and freights having increased in an abnormal way, we've done increases in '21. They were not enough. We admit that we underestimated how that increase would be. So therefore, it is high single digits definitely.
Our final question comes from the line of Daniel Johansson from Pantechnicon Advisors.
Can I ask if you are assuming that '22 is going to be a more normal year in terms of seasonality with the first half a bit stronger? Does that also go for your profits? Or will we see a little bit of a lag, given that prices are still to compensate?
We will. As we've done the price increases and they are fully implemented in Europe, as I said, from 1st of January because we had good deliverability and there's a little bit of a lag in North America. Generally, you will see us performing very well across the year with a more normal seasonality. And -- that means that we will see bigger top line growth in the first half of the year. We will see strong EBIT performance is, as Jonas referred back to, historically, we have a clear connection to when the top line is bigger, we have a better EBIT performance. So if you look at it, you will see a more normalized seasonality similar to historical years of where and when we do the bigger share of both top line and bottom line.
So where the sales is the profit is basically?
Yes. I mean it's very -- we don't overspend and we've communicated that since 2014. I had already been the CEO for 4 years before we went to stock listed. Since '14, we've told the stock market, don't be fixated about quarterly things because we don't run this business to make it look even and nicely spread out. We don't accrue a lot of things. We take it when it has to be done. We do things when it's logical. And therefore, if you look at that both in terms of where -- when in a year or something happens, it's not only because of the sales being big, so you got an economies of scale.There's also some actual logic that if you do a lot of new development projects, you're going to have a lot of tooling costs and other things towards the end of the year because you're launching a lot of new products in the beginning. That happens at the same time as we have the least amount of sales. But we don't accrue and do stupid things because then we would have to have 10 people fully employed just to smear out numbers, and we would have less control of them. So you can generally say that strong profits has always been in the first half of the year and partly in Q3, and then Q4 will be the weakest performing quarter also in the future.
Yes. And then obviously, you built inventory, as you said, and you ran your factories at a high level. You initially talked about. What was the effect from this on your fixed cost? Did you have a positive sort of over-absorption or how to call it in the quarter?
No. We -- it was actually contrary because what we have to do is when you do this, you can get nice absorption if you are super-efficient in a lot of extra capacity. Honestly, we've been running behind, and we've had Omicrons and other things. So if you look at it -- if I would be running this company to make quarters look good, I would not have built up inventory in quarter 4. And I would have looked -- we clearly would have looked much better from an EBIT performance. But I am very confident of a very strong top line growth in '22. I want to make sure that Thule as a company offers that same great service level as we did historically. We, therefore, took costly decisions to ramp up capacity even if it wasn't ideal for the quarter because it was definitely right for the future years, and we still delivered a 22.5% EBIT, so it was the right decision.
We currently have no further questions. So I will now hand back over to the management team for any closing remarks.
Thank you very much, and thank you all for listening in to what has been an historically strong and fantastic 2021. I personally have never felt as confident as I do now ahead of '22. And I know my entire team is stoked and pumped to do an even better job in '22. So I look forward to talking to you all after our first quarterly report in April and then welcome you to an exciting Capital Markets Day in May. Thank you very much.
This concludes today's call. Thank you for joining. You may now disconnect your lines.