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1. Company Snapshot

1.a. Company Description

Dometic Group AB (publ), together with its subsidiaries, provides solutions for mobile living in the areas of food and beverage, climate, power and control, safety and security, and hygiene and sanitation in the Americas, Germany, Australia, the United Kingdom, France, Italy, Sweden, the Netherlands, Canada, and internationally.The company offers climate control products, such as air conditioners, awnings, blinds, windows and doors, ventilation products, heaters, furnaces, and patio rooms and tents; food and beverage products, including refrigerators, cool boxes, cooking products, and accessories; and safety and security products comprising carbon monoxide detectors, security locks, safety handrails, safes, alarm systems, and gas detectors, as well as driving support accessories.It also provides power and control solutions, which include energy and lighting, marine control, and marine steering systems products, and control devices, as well as related accessories; and hygiene and sanitation products, such as toilets, pumps, hoses, bio-degradable cleaners, and smart electronic controls, as well as related accessories.


In addition, the company offers vessel controls, and fuel and system integration systems to the leisure marine industry; and marine blinds, screens, and soft furnishings for the leisure marine and yacht segments.Dometic Group AB (publ) provides its products for use in recreational vehicles, pleasure boats, workboats, trucks, cars, and others.The company was founded in 1922 and is headquartered in Solna, Sweden.

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1.b. Last Insights on DOM

Dometic Group AB's recent performance was negatively driven by declining sales, despite robust cash flow. The company's Q4 2024 earnings call highlighted a challenging environment, with sales declining due to decreased demand in the automotive segment. Additionally, the company's focus on product innovation and strategic cost-saving measures may not be sufficient to offset the decline in sales. A share buyback program was announced, which could potentially boost shareholder value.

1.c. Company Highlights

2. Company's Q3 Financial Performance Reflects Mixed Results Amid Challenging Market Conditions

The company's Q3 financial performance was marked by a 6% organic decline in revenues, with the Service & Aftermarket segment showing improvement compared to Q2, while Distribution and OEM segments declined by 6% and 8% respectively. Despite the revenue decline, the company reported a strong EBITDA margin of 10.4%, up from 8.6% last year, driven by cost reductions and margin improvements in most segments. The gross profit margin also improved to 29.6% from 27.3% last year, driven by sales mix and restructuring program effects. Earnings per share (EPS) came in at 0.36, significantly higher than the estimated 0.09116. As Stefan Fristedt noted, "We are very satisfied with the gross profit margin, 29.6% versus 27.3% last year."

Publication Date: Nov -18

📋 Highlights
  • EBITDA Margins Improved:: EBITDA margin increased to 10.4% from 8.6% YoY, driven by cost reductions and margin improvements across most segments.
  • Cash Flow Strength:: Q3 cash flow reached SEK 527 million with working capital down 26% YoY and inventory reduced to SEK 4.6 billion (124 days).
  • Restructuring Savings:: Annual savings of SEK 250 million achieved under the restructuring program, targeting SEK 750 million by 2026.
  • Service & Aftermarket Recovery:: Segment showed improvement compared to Q2, offsetting double-digit declines in OEM (minus 8% organic) and Distribution (minus 6%).
  • Marine Segment Recovery:: Organic growth of 1% in Q3, with EBITA rebounding to 20.8% and order intake stabilizing after market stabilization.

Segmental Performance

The company's segmental performance was mixed, with Service & Aftermarket showing a clear improvement, while OEM sales declined by double digits in EMEA and APAC, but grew in the Americas. The Land Vehicles segment saw a strong recovery in margins, while the Marine segment reported positive organic growth and improved EBITA margins. The Global Ventures segment also reported good margin improvements.

Cash Flow and Working Capital Management

The company's cash flow was solid, with a working capital level starting to come down, and inventory balance declining to SEK 4.6 billion. The company prioritized its CapEx projects, spending less than SEK 100 million in the quarter. The free cash flow yield is quite attractive at 23.97%, indicating a potentially undervalued stock.

Outlook and Valuation

The company's outlook is cautiously optimistic, with improving order intake and a stronger backlog in certain segments. Analysts estimate next year's revenue growth at 1.6%. The stock's valuation metrics, such as the P/E Ratio of -5.16 and P/S Ratio of 0.57, suggest that the market is pricing in significant challenges. The EV/EBITDA ratio of 11.48 is relatively high, indicating that the company's profitability is not fully reflected in its valuation. The Net Debt / EBITDA ratio of 5.62 is a concern, but the company's efforts to reduce working capital and prioritize CapEx projects are positive steps.

Dividend Yield and Return Metrics

The company's dividend yield of 3.23% is attractive, especially in a low-interest-rate environment. However, the return metrics, such as ROIC of -3.8% and ROE of -10.47%, are negative, indicating that the company still faces significant challenges in generating returns for shareholders.

3. NewsRoom

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How Dometic Group's (OM:DOM) Cloud-Based Marine HVAC Launch Shapes Its Connected Boat Investment Story

Oct -10

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Siren Marine Collaborates with Dometic to Introduce Connected Boat® Cloud-Based HVAC Control

Oct -07

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BNP Paribas Primary New Issues: STAB Notice - No Stab - Dometic Group AB

Sep -05

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Stabilization Notice: Pre Stab Notice - Dometic Group AB

Sep -04

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MeatEater Hits the Road for Second Annual College Football Tailgate Tour

Aug -21

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Minibar Refrigerator Market Forecast Report 2025-2030, with Profiles of Dometic, Haier, Electrolux, Summit Appliance, Whirlpool, Minibar Systems, HISENSE, Royal Minibars, Bartech, Koolatron, & More

Jun -30

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Dometic Group AB (FRA:D00) Q4 2024 Earnings Call Highlights: Navigating Challenges with Strong ...

Jan -31

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Spotlight On Undervalued Small Caps With Insider Activity In November 2024

Nov -11

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.70%)

6. Segments

Food & Beverage

Expected Growth: 3.5%

Dometic Group AB's Food & Beverage segment growth of 3.5% is driven by increasing demand for outdoor recreational activities, rising popularity of RV and camping lifestyles, and growing need for premium food and beverage solutions in the marine industry. Additionally, the segment benefits from the company's strategic acquisitions and investments in product innovation, expanding its market share and customer base.

Climate

Expected Growth: 3.8%

Dometic Group AB's 3.8% growth in the Climate segment is driven by increasing demand for energy-efficient and eco-friendly solutions, expansion in emerging markets, and growing adoption of electric and hybrid vehicles. Additionally, the company's focus on innovation, strategic acquisitions, and partnerships have contributed to its growth in the climate control market.

Power & Control

Expected Growth: 4.2%

Dometic Group AB's Power & Control segment growth of 4.2% is driven by increasing demand for electrification in the marine and mobile living industries, coupled with the company's strategic acquisitions and investments in digitalization and connectivity. Additionally, the segment benefits from the growing trend towards sustainable and energy-efficient solutions.

Other Applications

Expected Growth: 3.2%

Dometic Group AB's 3.2% growth in Other Applications is driven by increasing demand for outdoor and recreational products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on innovation, product diversification, and operational efficiency have contributed to its growth momentum.

7. Detailed Products

Climate Solutions

Dometic's climate solutions provide comfortable and efficient temperature control for recreational vehicles, trucks, and specialty vehicles.

Hygiene and Sanitation

Dometic's hygiene and sanitation products include toilets, showers, and sinks designed for recreational vehicles and specialty vehicles.

Power and Control

Dometic's power and control products include power converters, inverters, and electrical distribution systems for recreational vehicles and specialty vehicles.

Safety and Security

Dometic's safety and security products include alarm systems, cameras, and sensors designed for recreational vehicles and specialty vehicles.

Seating and Interior

Dometic's seating and interior products include seats, tables, and interior components designed for recreational vehicles and specialty vehicles.

Windows and Doors

Dometic's windows and doors products include windows, doors, and roof hatches designed for recreational vehicles and specialty vehicles.

8. Dometic Group AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dometic Group AB (publ) operates in the recreational vehicle industry, which has a moderate threat of substitutes. While there are some alternatives to RVs, such as camping or staying in hotels, they are not always suitable substitutes, especially for those who enjoy the RV lifestyle.

Bargaining Power Of Customers

Dometic Group AB (publ) has a diverse customer base, including OEMs, dealers, and end-consumers. While some customers may have bargaining power, the company's large customer base and diversified revenue streams mitigate this risk.

Bargaining Power Of Suppliers

Dometic Group AB (publ) relies on a network of suppliers for components and materials. While some suppliers may have bargaining power, the company's large scale and diversified supply chain mitigate this risk.

Threat Of New Entrants

The recreational vehicle industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for specialized expertise. This limits the threat of new entrants.

Intensity Of Rivalry

The recreational vehicle industry is highly competitive, with several established players competing for market share. Dometic Group AB (publ) faces intense competition from companies such as Thetford, Norcold, and others.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.15%
Debt Cost 7.83%
Equity Weight 60.85%
Equity Cost 12.45%
WACC 10.64%
Leverage 64.34%

11. Quality Control: Dometic Group AB (publ) passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Games Workshop

A-Score: 6.7/10

Value: 1.4

Growth: 8.6

Quality: 9.0

Yield: 6.2

Momentum: 7.5

Volatility: 7.3

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DS Smith

A-Score: 5.7/10

Value: 8.3

Growth: 3.7

Quality: 3.8

Yield: 4.4

Momentum: 8.0

Volatility: 6.0

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NEXT

A-Score: 5.6/10

Value: 1.8

Growth: 5.7

Quality: 6.7

Yield: 4.4

Momentum: 7.0

Volatility: 8.0

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Redrow

A-Score: 4.9/10

Value: 6.7

Growth: 3.8

Quality: 7.4

Yield: 4.4

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

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Thule

A-Score: 3.9/10

Value: 2.7

Growth: 6.1

Quality: 6.2

Yield: 3.1

Momentum: 1.5

Volatility: 3.7

1-Year Total Return ->

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Dometic

A-Score: 3.9/10

Value: 7.8

Growth: 3.9

Quality: 2.0

Yield: 5.0

Momentum: 2.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

44.76$

Current Price

44.76$

Potential

-0.00%

Expected Cash-Flows