Dometic reported overall first-quarter profits as its RV segment in the Americas slowed dramatically.
The company’s first-quarter operating profit was 11.6%. The RV OEM Americas segment, however, declined 14%. The Americas segment saw an operating profit loss of 5.1% in the fourth quarter of 2022.
President and CEO Juan Vargues said the company’s double-digit operating profit in a challenging market showed the company’s strategic initiatives are transforming Dometic into a more diversified, resilient company.
The macroeconomic factors impacting the company included the 54% U.S. RV production decline year-to-date and high retailer inventory levels. Both affected Dometic’s service and aftermarket business globally, Vargues said.
Organic sales growth declined by 13% overall with an aftermarket and service segment decline of 19% which was an improvement over Q4.
Vargues said, “We are taking additional measures to improve the results in EMEA and Americas and expect to see gradual improvements in 2023.”
Dometic is increasing product development and strategic growth investments in mobile power solutions and mobile cooling solutions.
According to Vargues, the Igloo business continues to perform well and the company has nothing new to report on the lawsuit filed by the sellers of Igloo. Dometic acquired Igloo in October 2021.
In response to an analyst asking when the company will release the first Igloo active coolers in the U.S., Vargues responded that after working on it for a year, Dometic expects to introduce the first Igloo powered coolers to the U.S. in the fourth quarter of this year.
“We are optimistic about the long-term trends in the mobile living industry; however it is difficult to predict how the current macroeconomic situation will impact the business in the short term,” Vargues said. “We anticipate a gradual recovery in demand in service and aftermarket over the coming quarters and continued stable development in the distribution sales channel. In the OEM sales channel, we foresee a gradual weakened demand over the coming quarters, except for RV Americas where we expect to see a stabilization in demand by the end of the year.”
The company’s cash flow improved while inventory levels continued to decline. Typically, Q1 is a tough quarter for the company, Vargues said, yet Dometic presented strong cash flow in the company’s second weakest quarter every year.
“We have service and aftermarket down 19%,” he said. “We have organic growth in America of -14% and are still delivering good cash flow and good EBITA margin… the best is yet to come.”
