Strong Sales Growth Amid Market Challenges

This article first appeared on GuruFocus.

Release Date: October 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Thule Group AB (THLPF) reported a 13% increase in sales compared to last year, excluding currency effects.

• The EBIT margin improved to 17.9%, higher than both last year and historical averages.

• The company generated strong cash flow from operations, amounting to 668 million SEK.

• New product categories and the acquired Quadlock business contributed positively to sales and growth.

• Thule Group AB (THLPF) successfully reduced inventory levels, with a target to decrease by an additional 200 million SEK on track.

• Organic growth was down 4% in the quarter, reflecting a challenging market environment.

• The North American market remains the toughest, with a 5% decline in organic sales.

• Currency effects negatively impacted net sales by 5% in the quarter.

• Retailers were cautious about replenishing inventory, affecting sales negatively at the end of Q3.

• The RV product segment continues to face challenges, with a decline in sales to the OEM channel.

Q: Can you explain the differences in gross margin between Q2 and Q3, especially excluding Quadlock? A: The gross margin increase is primarily due to price and product mix, along with efficiencies in factories and supply chains. We are producing at a higher rate this year, which has improved utilization and supply chain efficiencies. (Unidentified_3)

Q: Regarding Quadlock, why was EBIT lower in Q3 compared to Q2, and what should we expect for Q4? A: Last year, Q3 was strong due to new customer introductions, which we didn’t expect to repeat this year. The seasonality has shifted, and while Q3 was softer, Quadlock still shows approximately 15% growth year-to-date. We don’t foresee significant changes heading into Q4. (Unidentified_3)

Q: How are you approaching pricing for next year, considering recent tariff developments? A: We plan to implement annual price increases as of January 1, 2026. We are monitoring the tariff situation closely and will offset tariffs with efficiency improvements and potential price adjustments if necessary. (Unidentified_1)

Q: Can you provide insights into Thule’s performance in the US market, especially after the June price increase? A: Despite a 5% organic decline, we continue to perform well in the premium segment, driven by new products. We believe we are gaining market share, particularly in bike carriers, despite overall market volume declines. (Unidentified_1)

Q: What is the outlook for the RV market in Europe, given the prolonged underproduction? A: OEM production has been weak for several quarters, but we expect this drag to end during the winter. While not back to full growth, we anticipate the OEM impact will no longer be a drag by Q4 or Q1 next year. (Unidentified_3)

Q: How do you plan to balance gross margin and volume in the US market, given the high gross margin and volume decline? A: We focus on maintaining high margins in the premium segment while expanding our portfolio to include mid-price products. This strategy allows us to address more market needs without cutting prices on top products. (Unidentified_1)

Q: What is the status of your technology platform initiative, and how will it impact costs? A: The technology platform initiative aims to harmonize components across products, improving production efficiency and reducing costs. This structural initiative will support gross margin development, with more impact expected next year. (Unidentified_1)

Q: How are retail inventories currently, and what is the outlook for organic sales? A: Retailers are keeping inventories low to focus on cash and profitability. We don’t see significant stockpiling, and the end-of-season effect in Q3 is not expected to continue into Q4. (Unidentified_1)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.