Thule Group, Capital Markets Day 2022

Dear guests, welcome to the Thule Group Capital Markets Day 2022. We are here live in Hillerstorp, Sweden. It's been a long time waiting, but we really wanted to show you the fantastic roof rack manufacturing site and the world-leading Thule test center and the development center that we've constructed over the last few years. You're welcome to where it was all founded 80 years ago. Join me inside as we soon will start. Very welcome, it's great to have you here. And as I said in that little movie clip, it is extra nice to have all of you that have taken the time out to come and visit us here in Hillerstorp. But we are not forgetting you that are connecting from your kitchen table or your office table to connect via digital download and streaming and seeing what we have to talk about today. And of course we have lots of interesting to talk about because we always do, but especially now it's been a few years since we did a live capital markets day. And since it's been a few years, I need to go through some of the formalia, some of the rules. They are behind me now, you've read them, now we can move on. And so when we look at it from a capital markets day perspective, it's of course a chance for a company to share what we are intending to do in the future. But when you've been around for 80 years, which we are celebrating this year, it's also key to always go back to the classical thing: to know where you're going, you need to know where you come from. So we're going to talk a bit about the past, the present, to be able to also talk about the future. We will do that today. With a very simple program: we're going to do a presentation of roughly 1 hour 15, and then there will be some questions, I'm sure. And then after that we will split up in two parts. The digital participants will get some great movies showing what you wish you would have traveled to Sweden to see: the fantastic roof rack manufacturing facility and the world-leading Thule test center. And then the participants here who will do the tour, after the tour they will also be getting the chance to see the product expo outside as well as getting a nice lunch before you go drive home again. So, very welcome to this Capital Markets Day, and I think it's always nice to kick it off with something that is moving on the screen.

So products is what we do best, and we've had 80 years of product-driven growth. And when you have that, it's of course always important to remember that history and what you've been doing and what has made you a special company, because we actually believe we are a special company. We should all do that if you work for a company, otherwise how do you get excited? In our case, we build it on some very strong pillars. It's about a long-standing culture, and that's why it's so exciting to have you back here on our home street. And it truly is the home street, it's the same street as the company was founded 80 years ago, because that culture—we'll come back to that—and the Swedes in the audience know what this area has as a culture, but we'll talk about that also for the international guests. And the way we look at our business is of course key. We've always been a sustainable company, we've always looked to make high quality products that are built to last. That's our strongest commitment to sustainability. It is brilliant for us that we can see roof boxes that are 30 years old on a brand spanking new electronic electric vehicle up in the Swedish mountains, for example. It shows that the way we have done products has always been with a long-term sustainability approach. Then product is king. You will hear that and you will see that when you talk to everybody in the company. There's a lot of jokes internally that my job is actually product manager and I just faked the CEO title so I could work with all the categories. It's not fully true, but of course in any product-driven company, all of us are very engaged in product, and you will see that throughout the day. But it's not enough to do great products. You actually need to deliver those products to the market in an efficient way so you can be profitable when you sell those products, and you need to be handling that supply chain in a flexible way as the world moves on. There has never ever been greater tests for that than the last two and a half years. We did not perform as well as we did historically, but I can assure you we outperform the vast majority of companies by having trained our organization to be an efficient and flexible supply chain organization. Then you also want to have a strong brand, because product is one thing, but if you combine that with the stronger promise that a brand gives to you, you have a higher likelihood of being able to enter into new things. And of course, that work of building on the Thule brand is a crucial component in what we do, and we believe today that we do have a very strong lifestyle brand, and we're convinced that it will be stronger in the years to come.

Then you have to help retailers. It's not enough that you make a great product, you have a great brand, you pull people into the stores. You also have to help them by training the kids on the floor, providing great digital assets, providing fantastic POS material, etc. So that retail support and push is a key part. We have proven that that gives us a strong growth, that is a profitable growth, that generates a lot of cash. So that's a great foundation to start on. We have also the opportunity thanks to that to potentially add some smart strategic M&A, some bolt-on acquisitions, and some other things. And therefore we are convinced over time we will deliver great shareholder returns. When we look at what we do as a company, therefore, in how we do these things, it's a lot about the business of a heritage, as I said. And the heritage is this Gnu. You're in the Gnu region, it's known for the Swedes, it's this slightly stingy, as we say from the south of Sweden when we joke with them, but it is this: you want to do things in a cost-efficient way, you want to do things in a smart way, and you have a true entrepreneurial spirit. A lot of people have started their own companies in their own backyard, like Thule was started once upon a time. That also creates a grit attitude. It's never going to be easy, you're going to have to grit it out, you need to work it. It's rarely the first prototype that is the brilliant prototype, you need to work on it all the time. And I can assure you this company has a lot of people with a fantastic grit attitude. We then combine that with this approach of great products, make great product, and we will be successful over time. If you do all of those things and then combine that with owning and living your own brand, which a lot of our employees are doing, you have a chance to be successful over time, not just for a quarter, not just for a year, but over a long period of time. And that builds on the brand promise that we have. We have safe products, they are made of high quality, they're easy to use, they're sustainably made, and they're trustworthy. And we are trustworthy as a company, as a partner. But the future is uncertain, there are things happening all the time. So if we can show flexibility and dare to constantly evolve and not just rest on our laurels and believing that just because we've been the best in roof racks for many years that's the only thing we should do, that's the challenge, and that's what we are working on as a company all the time.

Another thing that I think is key in all of that is delivering results. I know you guys are clearly liking Thule for all the cool stuff we offer, because I see you out there when we have a product expert, but I know it's also very easy to say you wouldn't like us if we didn't deliver great results. So growing sales is a way to survive as a company. If you don't grow sales, you will struggle to survive. So growing sales is something we've done for a very long time. Since we became stock exchange listed, we in fact had a CAGR of 11%. But we clearly admit that we have been boosted during the pandemic. We've been helped by the staycation trends, and you can see that on our numbers that our growth rate has been higher the last two years. So a lot of the analysts and I'm sure a lot of the investors will be asking the question of the long-term sustainable growth. We are very confident in our long-term sustainable growth, and that's what we will be talking most of this meeting about. Then we clearly also have a point of that growth making money. It is very easy to talk about growth, but profitable growth is what makes companies great. So we have shown that that growth that we generated with an 11% CAGR has been generating an EBIT growth of 90% CAGR since the stock listing. And for those, and we have quite a few investors that have been with us since the first since we became listed, you remember that we first presented that we would have an EBIT margin of above 15%. We reached that 2015, we then set a new target to reach 17%, which we did in 2017. We then in 2017 raised the target to 20%, which we hit in 2020. When you now look at it, I have a lot of expectations that people said, 'Then you must have an EBIT margin target of 30% by 2030.' So I will disappoint you early on the meeting. That's not the case. We will though keep our EBIT margin target of above 20% with very strong growth, as we will come back to. So we are at a high profit level and we will continue to deliver great profits.

The way we do it, mentioned many times, is about where we're sitting. In fact, for the people that are participating live—for you that are digital, you don't know it—but we're actually sitting smack bang middle of the Thule test center. So where we are is a foundation on what we do. We develop and test products in all the ways in this core development center here in Hillerstorp, Sweden, where we have over the last two years done fantastic investments to give all the great team we have here even better equipment, even better opportunity to deliver future fantastic product. We then have four niche development facilities specializing in categories: two in the US, one in Longmont, Colorado, and one in Seymour, Connecticut, and then we have one focusing on the RV product in Manhattan, Belgium, and then we are also actually now in Malmö opening up a new development satellite at Next, where we have the head office. That means that we have more than 300 people in-house in product development, and they cover all the competencies, and I mean truly all the competence, from cutting and sewing fabrics, simulations, testing, hard good, soft goods, product design—fantastic. And if we mention product design—your investors, many of you are analysts, you might not be loving the product design world, but if you're into product design, there are like the Oscars and the Grammys: it's the IF product design gold award and the Red Dot Best of the Best award. Our team has won more than any Scandinavian company the last 10 years. We have won four for our children's product new category with four IF product gold awards, which is very rare and difficult to get. It shows that we can go into new categories and set our design language and our product approach even in new categories.

But as I said, it's not enough about—I'll see if the clicker works, maybe not, maybe yes. It's not only about doing the product and developing it, it is also about getting the products out there, and that has been a struggle the last two and a half years. Difficulty in getting components, difficulty in getting staff. You've had waves of omicron, you've had situations happening. So what we have had to do is really work harder than ever on that. Luckily, we were training for decades because our business historically has been seasonal. When you have a seasonal business, you have two approaches: you either manufacture a lot all the time and sit on tremendous stocks, or you ramp up and ramp down. We chose the ramp up and ramp down approach, which then was a fantastic training ground for what would come in a much more extreme way with the pandemic. As I said, we didn't deliver on all the aspects during the pandemic, but we truly did better than most. When we look at how we manufacture our products and how we source and how we send them around the world, we truly try to look as much as we can on all the sustainability aspects, and Kaiser will talk more about that later on. But we do look at the full breadth of our sustainable manufacturing. When you have a broad portfolio, which we do, we have some products we sell very vast quantities and some we sell relatively few of, because we are a broad-based offer in the outdoor arena. When you do that, you need to realize that your retail customers and the consumers have higher and higher expectations all the time in terms of flexibility, next day delivery, late order booking times, etc. But then you need to set your business up in different ways. For the high volume products, like you will see here in Hillerstorp where we have roof racks which is high volume, you will see great amounts of automation. Automation for two reasons: it is the easiest way to secure high quality with consistency, but also we clearly say it's a more cost efficient way when you mass manufacture. We have then other product categories where we have much more manual labor because we have to play on that full arena. If you look at it, what we're doing and you've been seeing that in the quarterly reports that I've been doing that over the last year in 2021 and in this year and in next year, we're dialing up the capex which historically has been around two and a half percent, we're going to be around five percent.

We're going to be around five percent these three years, and the logic is simply twofold, or actually even threefold. Because some of you already looked through the press release and know that we're launching new products that we will manufacture in our own facilities, but I'll come back to that. But the first two is actually for the existing categories. Number one is that during the last few years, our sales growth was above and beyond what we planned for. We have therefore anticipated some of those capexes needed to cost efficiently mass manufacture those products. We were able to meet a lot of the demand during the pandemic, but it wasn't in a way that you ideally would want to run factories. It was three shifts, it was night time, you had to have trucks coming in. Those things are actually not the most cost efficient when you work with manpower and assembly. They work well when you have a processing plant that you want to run all the time, but in our type of business, it's actually smarter if you can to work on a more logical shift level throughout the weeks. So one reason is to be able to have the capacity that we needed already. The second one is we are automating more, and strangely enough people don't realize that always, but automation takes a lot more space because you need to have automated guided vehicles that are not obstructed by things. So you create space to enable to invest in robotic assembly. Then the robotic assembly as an initial investment is higher, but you do get a lower running cost over time. So we are for the current business doing both those two things: expanding capacity for the current volumes and the future growth, and increasing our automation levels. Those are driving up. And then as we are going into new product categories and as we have decided to finally assemble those in our new Polish facility, we've expanded our facilities to produce those products as well.

There's been a lot of questions on the quarterly reports about our higher inventory levels than historic. This is a very conscious choice. As we've heard, and I was talking to somebody just before we started, they were visiting a semiconductor plant and I said, you're asking them how they can ramp up production, I assume on all your other customers' behavior on behalf. But it's not only semiconductors. It is very difficult to get access on a consistent basis of most things at the moment. If you then want to run an efficient production and at the same time deliver a high on-time in full next day delivery to your retail customers, there is only one way to do it. It doesn't matter how flexible you are if there is constant disruption. So the logic is you, for a period of time until you are confident that there is more calmness in the global supply chain and more consistency in it, the best way is to ramp up your inventory level slightly higher. We are lucky in the sense—and I mean lucky, that's not about smartness—we are lucky that we don't have products that become stale after a few months or out of fashion the next summer. We have products that you can sell for a long period of time, which makes us extremely comfortable. Even our CFO, Jonas, who's slightly more nervous than me normally, is extremely calm in terms of our inventory holdings. So we are definitely not seeing any risks whatsoever, and it's the smart way of ensuring that we can deliver that type of service level that we want to deliver.

So when we do this, we as I said always want to do it with sustainability in mind, and therefore I want to invite up on the stage Kaiser Fone, our Senior VP HR and Sustainability, who has an excellent judgment of character because she was the person that hired me 17 years ago.

So, uh, we have four product categories today. We have a strong product portfolio in those categories, and I'm going to go through them quite quickly. So 67% of sales in sporting cargo carriers, as we call it. So these are the roof racks, the kayak carriers, the bike carriers, the roof boxes, all those things that enable that active lifestyle and bringing all your gear with you if you're going for a family weekend or for a long trip. 14% is in what we call RV products, that's products and accessories that sit on the outside of motorhomes and caravans. There we are the market leader in our niches in Europe. 12% in active with kids, a category we went into in 2011 and that is now starting to be a sizable part of our business. And 7% in packs bags and luggage. If you look at a regional perspective, North America and Latin America, called region Americas for us, is 28%, and the rest of the world is 72% of sales. So we are a truly global company, and as I said, with a broad product portfolio. If we look a little bit at what differs in the two regions, because there are some differences: if you take the biggest category, no differences. We are the market leader in the world, we are the market leader in both regions in sporting cargo carriers, clearly the market leader in all the places, so no major differences.

If you take recreational vehicle products or RV products, there is a big difference. Many years ago we decided to shy away from the North American market for those same products because margins were simply not good enough. We don't want to play in categories where for some reason competitors have pulled down the margins. So we chose to focus on the European market on those niche categories with awnings, tents, and bike carriers and other things on the RVs. So big difference in sales. You're seeing some very rapid growth numbers as of late, but from a tiny starting point in regional markets for RV products. And that's because some of those niche segments that meet much smaller, more European style of vans are finally starting to take off in North America, and there we can be profitable. So those categories we are interested in.

If you look at the active with kids, there is one big difference, and that is seen in how parents are using the products differently around the globe. We love countries where people bike commute with their children because we are the number one in the world with bike commuting tools for parents that bike with their children. If you travel the world, that is very much central Europe, so you have the DACH region, you have the Benelux, and it's the Nordics. That's where you bike commute every day back and forth with your children and where our type of premium really great bike related juvenile products do well. Which is why we're bigger in active with kids in Europe and rest of world. In North America, for example, or Latin America, or if you go to Australia, New Zealand, it's a recreational thing, it's more the super duper triathlete or the people wanting to have a great weekend thing in the park, which means less volume for those type of products. Strollers similar more on a global basis.

Then packs bags and luggage is more of a historical heritage. Once upon a time, Case Logic, which we own as a brand, was founded in the US and became a very strong brand with a very well established base of retail customers and a broad portfolio. That means that there's a long history of doing various packs and luggage things. But we have in Europe focused on the Thule branded and growing into the category in those niches we've acted. So that's why there is a bigger share of the business in region Americas. But in the way we run the business, it is a global business. So you will see total as a company where we do this: sales is local, but the rest is global — brand, product development, supply chain setup is a globally run approach to business. Yes, there will be some differences in portfolios due to the type of consumer, due to the type of interest, but the way we run it is on a truly global basis.

So if you look at sporting cargo carriers, as I said, two-thirds of our business today. We are number one in the world. There are strong local players. I think one of the most interesting things when we have internal discussions about our categories is actually it's often more complicated to fight a fight against a very strong local niche player that maybe only makes one product and only sells it in one country, often a family-run company. They're okay with pretty low margins, they're very aggressive, their dependencies on this one product. You should never underestimate those competitors, and I can assure you we don't. So we have lots of strong but small competitors in that category. We are the only truly global player, which gives us some advantage: fantastic economies of scale advantage, fantastic competence advantage, but still never underestimate those local competitors. If you look at what's going on in the world and probably the most hotly debated subject, if you would ask all the analysts, the constant question that will come back is: will the world of this type of product continue to grow from the platform it has? Our belief is that it will. It's not only our belief, there are others that are believing it in terms of people looking at the trends for this type of activities. But it is to be proven, we will have to see in the coming two, three, four years. You shouldn't be judging anything on a monthly basis if you say about a long-term trend. But this long-term trend was existing before the pandemic, clearly a growth of this type of category amplified during the pandemic. And I don't know you guys, but if you ask around your friends that were a little bit forced to do their local vacations, you're playing it maybe in a league where they travel to very fancy places. But even so, when they were then forced to go home on a vacation closer to your home, then one common thread when I talk to my friends and when my daughters talk to their friends is that was actually nicer than I thought it would be. It was a great weekend, that mountain biking weekend close by home. I didn't need to go to Barcelona to have a great weekend. So although you will be seeing, and you see constantly on the news that travel is picking up, yes that's going to be the case. We have a strong belief that local staycationing for many reasons, not least the sustainability reasons that Kaiser talked about, will continue to grow from that platform.

We have a very simple remit here: we're going to strengthen our global number one position. And that attitude is crucial to what we do in this company. It's easy to think that we will get infatuated with the new categories because it's always fun with new, but I can tell you when you look at the team here and in the plans and in sales organization, we had 225 international sales people here last week. And when we were looking at it, it is of course key to drive this category because it's the bread and butter category, fours and two-thirds of our sales. If we look at RV products, where as I said we have a very clear number one position in our niche in Europe, where the team has done a fantastic job to take that position. It's a different business, and we've said that from day one when we became stock listed in 2014. We made it clear that there is a major difference on how these products are being sold. The main reason is simply this: if you take sporting cargo carriers, the consumer trusts themselves to put it on the vehicle. You can put it on the tow bar, put it on the roof rack yourself. When you're buying a motorhome or a product for a motorhome, you just simply — unless you're a German engineer, because some of them do — but most common consumers will not trust themselves to drill a hole in that flimsy RV wall that they spend 50,000 euros for, because they might be drilling straight into the back to a fridge or a toilet from Dometic or something like that, and you don't want to do that. So they will ask the dealership or the manufacturer to do it, which means it's not a retail channel, it's not an aftermarket, it is a different type of business. The majority of it is dealership, but there is a lot of OEM business, so there is a slightly different business method. The other part: since the consumer does not want to do this at the time themselves, they will often actually do the acquisition of our product at the time when they acquire the vehicle. So that means it's a significant ticket outlay, let's be clear about that. It's thirty thousand, forty thousand, fifty thousand euros plus our little extra for the accessory they added for us. Differently, therefore you have an association which is one of those questions that will come now: what about financial strength out there? From a consumer desire point of view, the market has never been hotter. The market from a wanting to own a small vehicle, wanting to go on RVing cool weekends, bring that gear with you, do those things, have never been higher.

So you can see that in all the stock listed companies in the sector, they have fantastic order books and they have order books as long out. But there's always a challenge when you have order books long out and you're struggling to get the vehicles out, because they are truly struggling. They are not getting enough chassis. And when they can't get chassis, they can't build the motorhome. So the biggest challenge in the RV industry at the moment in Europe, where we do 95% of our business, is with those manufacturers struggling to get enough chassis. The order books are fantastic, there's a lot of consumers waiting, but the finance world is happening in the meantime. Inflation is happening. What will and how will that impact? That is something that we'll come to see. What you can say is that a few years ago, when the industry had less of financing solutions in place, there were some of the less well-off, so a younger couple wanting to buy a small motorhome, for example, didn't get the loan from the bank to do that. Here, the manufacturer has been smart, they've created financing solutions and all of that, but there's still maybe that interest rate question that you will ask yourself. So I think here is going to be key to look at what happens of how the industry picks up with manufacturing capacity versus what goes on with inflation. What we know is we've always outpaced the market. So when the market was weakening, the team did a fantastic job and we didn't grow, but we did not decline nearly as much as everybody else. And in the 12 years since then, we have been beating the market by far, and I'm 100% convinced that we will continue to do that.

If we look at the next category then, active with kids. Active kids. What's the category? As I said, we established ourselves actually by an acquisition, which sounds almost weird considering how few acquisitions we've done and how many times I've repeated I'm an organic growth first person. But we had an idea of wanting to go into the juvenile product category, and sometimes when you go into a new category you want something that kicks it off and you get momentum. It was obvious for us that you wanted to do it in a logical way. If you are a brand associated with very much activity outdoors and if you have a fantastic distribution network already for all the bike channel in the entire world, a very tactical entry into juvenile was of course something related to bikes. So we acquired the world's best bike trailer company called Chariot, and we have since then done updates and completely revamped the portfolio and had fantastic growth of our bike trailer since then. And we are now undisputed global market leader in bike trailers. We then went in ourselves and did organically bike seats, and after a while we actually acquired also a small company doing bike seats to further bolster the size of our bike category. We then went into strollers, and we did that also in a tactical way. As an active brand that had been doing these fantastic multi-sport bike trailers where people were doing triathlons with them, you could sneak into the category with the credibility as a brand doing the world's best jogging stroller, which we did. Then we could add an all-terrain stroller that was very easy to drive around, and now this month we're launching our fourth stroller model and are becoming a serious stroller brand around the world. So here our remit is looking at a category that actually is in terms of bike commuting clearly helped with what we see in the last two years. I'm sure you've all read about how any major city in the world is fighting about the price on who has done most infrastructure investments in bike commuting in the last two years. Paris is winning at the moment. Paris has gone from one of the worst to in two years have done as much investments as they were planning to do in 15 years. They did over two years in bike infrastructure. And if you've been biking with children, you know you want to be feeling safe on those bike commuting lanes, etc. So that is one key way of getting more people to bike commute. We feel very comfortable of the long-term trend of bike commuting. And in strollers, it's pretty straightforward: we want to grow market share by having a broader portfolio and being more and more recognized by more parents around the world. We also by the way do the world's best child carrier backpack...

We also by the way do the world's best child carrier backpack, so if you're going out hiking you should definitely have a Thule Sapling because it's winning every test and every award. So we have a very strong portfolio in our active with kids. If you look at packs bags and luggage, there we are a very small niche player. I mean we're really playing with the 800-pound gorillas, as my American colleagues like to call it. There are some fantastic huge players in packs and luggage. That means we need to be smart at how we play in this category, and we have to admit we weren't smart when we timed our entry into luggage because it happened just before everybody stopped traveling. We were maybe more unlucky than unsmart, but that was terrible timing. I often say they're saying we timed the purchase of the rooftop tent company brilliantly because that was the opposite, but clearly an entry into luggage at the time was a very mis-timed entry. The market just crumbled down to 30% of what it used to be. It is not near where it used to be yet, and it will take a long time. So what we are playing at here is we are of course targeting to be a strong niche player in certain types of packs: for the more active people, the bike hydration packs, duffel bags, but also in the right bike commuting everyday commuting packs, etc. So we're trying to place in a smart way. We also see clearly some opportunities here, because when the market is incredibly tough on the incumbent brands that were solo doing packs and luggage, some of them aren't around anymore and some won't be around in the future. That gives opportunity for players that have a strength in the right way, not buying the share because then you're not making any money, but earning the share of that growth that will come. So that's what we're focusing on: winning that market share in those niche categories where we think we can be a profitable player and make good sense. So all of that then leading into what one of the big announcements then at this Capital Markets Day. We have been teasing you so long, so that was time. There is only so... Daniel is so upset with me in front row, I mean come on, how long can you talk about new categories? We've talked about it a long time. I mentioned a few times that one of the reasons we had to talk about longer is we decided to postpone. Actually, with everything going on in the supply chain complexities, there would be nothing worse than launching into a category, pushing, convincing retailers to push out an incumbent brand, and then immediately start having serious delivery issues. It was bad enough to do that if you were a category player that was number one that had proven for many many years that you had fantastic delivery performance, because then they would forgive you as most people have in retail over the last two years. But to do that in a new would have been very dangerous. So we, with development projects and everything going on, we decided to slow down. That meant we might as well announce two of them at the same time because the other one was moving on as we spoke. So now we're into new categories, and when we talk about new categories, there has to be some remits of what you do in a new category, what you offer and what you decide to tick. If you are a company, what should be ideally possible to say: yep, click on that, take on that, let's go for this category. Ideal world: it's a big market. Big market by default is Thule's definition on big market. We are not talking about sneakers size of markets or t-shirts market, but in our type of business, a relatively sizable market so it's worth the efforts of investing over a few years before we go into it. Secondly, it should be a global market, because one of our fantastic strengths is because we played in relatively small product niches. We early on already in...

the 50s and 60s went global and we became good at cost efficiently serving the world. If it's a category therefore that is owned by one market only the US, a local very strong US brand could do as well as us. We want to use our advantage of cost efficiently reaching the globe, so ideally a type of product used on a global or at least in many countries. Third, it's always easier to sail with the wind and against the wind, so generally you want a positive market trend in the category you enter. Fourth, it needs to have high gross margin for the best players. It is incredibly presumptuous to believe that you as a new player will be able to have significantly better gross margins than incumbents that have done a fantastic job for many years in a category. Then you need to be one of those truly revolutionary companies, and we have to admit we've mostly been an evolutionary company. We haven't revolutionized anything; we've evolutionary developed great products with great margins. So we need to enter something where not all the players – because there's always lots of mediocre brands that don't make a lot of money – but where the strong brands are truly profitable with high gross margin. Then due to where we position the Thule brand, it is the case that you can have fantastic margins at low-end price points, right, because you run your business that way, you run it very costly, very lean, and you sell semi-crappy product. And all of that we are not that. We need that a sizeable part of this global market is in what we would define as a premium price point segment, because that's where the Thule brand fits. And then if it's a product where it's not just about visual design – because if it's just about visual design, we lose out on one of our biggest strengths. We have a fantastic team, you will meet many of them when you walk around, but a fantastic team in taking consumer insights and with the ease of use turning that into great products. So we want design and function to be part of that new product category. Therefore we can say it should fit the brand and it should fit our competencies as a company. Also competence is ideally in manufacturing. If it's combining plastic pieces with aluminum extrusions in a very smart way with an automation and some assembly, we're going to be good at it. So that's a category that is more appetizing than others if it plays in that way. Then as you've heard about what we did in the juvenile category when we started with activity kids, it's ideal if we see that there are maybe some smart, right little players that have something but don't have economies of scale, don't have our machinery behind it, where we could add on to speed the journey on the new entry. That's always a nice, but as I've told every investor even before the IPO, never put that into your models. Always take that as cream on top of what we do, because we don't put it into our financial models. We see it as cream on top of what we do. If we do all those things, it should in our view as a new category provide great shareholder returns. So now, Daniel, time to finally talk about the new categories then, and for the rest of you as well by the way.

So welcome all dog owners to the world of Thule. What we're doing is simply – and it was a very timed question I got outside of I wish we had you had something – yes, we are entering the world of dog. And it's not only because my older sister who's a veterinarian and a candle loader has been on my neck for the last 15 years about it, or that loads and loads of employees have been saying we're so good at that and there are not so many good products out there, why don't we do it. It is because we clearly see a very good market opportunity. There are two main reasons for this. One is – and we can quick show our hands how many dog owners in the group here – good to see because you will understand me, the rest of you might not. If you look at it, the dog owners are seeing the dog more and more as a family member. When you see somebody more and more as a family member, what you're going to do is you will be prepared to spend for quality, if it's quality pet food or if it's quality products. And you're going to be wanting to bring them along and do things with them. That is an ideal combination for us. If you then look at what the other trend is – the pandemic also didn't just make people do a lot more staycations, the dog industry has seen a boom. Some of you may have bought a dog during the pandemic and then you pay twice as much for your Labrador Doodle as you would have done before, but generally you can say the dog ownership is actually very high. Sweden is one of the lowest, 16% of households. There are countries where 40, 50% of the households own at least one dog. So there is a sizable market out there. The type of products that we do are already being seen around the door. These are just four images from Instagram where somebody hashtag Thule and it happened to be with their family and dogs doing things. So what we're wanting to do clearly is to enter into a category. We will do that entering into a category in two types: car transport of your dog and bike transport of your dogs. We've already entered in a very sneaky way because we just launched our Thule Courier bike trailer a month ago. The Thule Courier bike trailer actually already has a dog trailer kit to it. It is a children's bike carrier bike trailer, but that children's bike trailer you can also transform into a cargo bike trailer and with buying an extra kit you can transform it into a dog trailer. But it is car and bike. We know both. We know a lot about car transport. We know a lot about dog transport – sorry, bike transport as well. If you look at car transport, there are many modes of transporting your dog. The most common one is the dog just walking around – let's be clear that's the fact today. Still the dog is doing everything wherever it wants to be or just sitting on the seat. But what has been growing very fast as the dogs became more and more family members and as various laws and regulations are quickly stepping up around the world is there is an expectation of safety, not only for the dog but for the rest of the passengers as well. So what is happening? It could be how you transport in the back of an SUV or a hatchback or a station wagon or on a pickup truck or in the back seat with a harness or many other solutions. And we will be a full service provider in this category. The categories today are dominated by small niche players. They do a great job. So it's the same as in sporting cargo carriers: just because they're small, local niche players, we will not underestimate them. They've done a great job in establishing themselves. But there is no strong global brand. We are convinced with our design skill, our competence, and our manufacturing capabilities – because we will be manufacturing these products in our facility in Poland – that we will be able to become very quickly a very significant player in this industry. It's a very difficult industry. I'm going to get follow-up questions later on in the quarters to come from the analysts about how do you define the size of this market. Trust us, that is going to be difficult. But if you do a judgment from many different sources, our expectations is that in the premium segment, which is the only one we care about, the market is around one and a half billion SEK today and fast growing. If you take bike transport, it's a smaller market. We estimate that it's a half a billion SEK. For bike transport, we are the world leader in bringing your bike with a bike trailer, so of course we will be bringing a breadth of fantastic products to bring your dog with your bike. But there are also other solutions around the bike that will be coming. So clearly stepping into this category fully, becoming over time as we always do in logical steps: first product, then being a crash-tested world's best dog cage for the back of an SUV, station wagon, or a smaller hatchback.

So that's category one. So we've been holding so long, we might as well then rush on and make sure we talk about category two as well. And once again I think the best way to do that is to show a small clip. So yes, you were all right in your guesses because that must have been one of the least surprising new category entries. We're getting into the car seat category. And there is a lot of logic for that as clearly as the case because we know a lot about car safety and we nowadays know lots about children, and that combination is what we will attack now. It is an extremely safety-focused, very technical category with very high demands. That sounds scary, but that's actually what we love. So we like those aspects of it. There are many usage modes. And no, you're not supposed to be able to read every little font on there, but what the logic is: if you take an infant seat, it is used in your home when the kid is there, it's used on your stroller, especially in North America where a lot of people do not buy bassinets at all, they go with the car seat and click it into the stroller only. So it's used in that strolling mode and of course in the car to be safe. So there's a lot of modes to consider and a lot of safety aspects. And therefore you have to be extremely stringent. This is children's lives. I mean, we all go when the music goes up, there you go, like oh, it's enough in your stomach right. So if you look at it, we have to be very, very conscious about the various regulations around the world and the various consumer expectations. You can say that the regulations are extremely different actually. In Europe, it's defined by what is called the ISOFIX UN R29 rules, which are very modern, very stringent. And then in North America, a little bit more old-style security standards in there. So we will be going about this on a region-by-region perspective with a global mindset that the product portfolio must meet up to the requirements and the desires of the parents in different ways. There are some common key points though. Truly crucial in this product position in car seats for children has to be foolproof. So it has to be tested endlessly, it has to be followed up, and it needs to be truly foolproof. But it also needs to be reassuring for the parent that it is going to work. It is scary to look at how many cases of people not having put their car seat in correctly and how worried you are that you haven't. So this constant tactile, visual, audible confirmation that you've done the right thing, it is safe, is a very key thing. But do not underestimate that it needs to be desirable. If it looks too clunky, too technical, too safe – it is a little bit like a company where I happen to be the chairman, where we could discuss helmet design. The best helmet is a huge thing but nobody would wear it. You need to be also having something desirable that people actually want to use. You need to combine all those things. That's the type of categories we love. So we're very excited to get into this category. As I said, we're going to enter it in steps. We're entering Europe first, and we're entering Europe next autumn. In next autumn, we will come with a common base where an infant seat and the toddler seat can be applied on the same common base. We will then the year after coming to North America where due to the regulations and expectations of children's ISOFIX etc., we will come with a base and an infant seat and another base and a toddler seat for the North American market. And also next 2024 autumn we will then have a booster seat for both regions as well as when the child gets bigger. We are then consistently evaluating entry into other geographical regions with other regulations, and those will be fully defined and coming in the future. But we have a very strong portfolio coming then in 23 and 24. If you look at the market and differences – this is more for the printed later on, you don't need to look at everything that is written there. There's a lot of expectation that the car seat market is somewhere around 85 to 95 billion SEK if you ask most people. Very difficult to define as well. Why are we then saying that our target market is only 14 billion? 6? 1-4? 7 and a half billion SEK in Europe and 6 and a half billion SEK? It's because we look at premium. We're only interested in really high-end premium solutions with all the bells and whistles. That's where the Thule brand will be. And there's lots and lots of cheaper price points that we will never play at. So the true target market potential is a 14 billion SEK market with these launches. And as I said, there are very strong incumbent brands that have been in this category forever. We do not underestimate them. What we know is that with our fantastic experience of what goes on with the car in various situations and our fantastic experience on what parents want to do with their kids, we are convinced with all the efforts we have put into this organic development that we will come with great products that will win market share. So when we then look at winning market share and ticking things, that sounds all good but we also need to make sure that we actually deliver on all the aspects we said from the beginning. We said we want to take a lot of things. So maybe a question mark on dog transport market size if you don't think 2 billion SEK is big enough we do. Intelli-? We tick that. But what is really nice with these categories is it sticks all across. It fits our competences, it fits our brand, it fits the size of the market, the global market and all of that. So we feel very comfortable that we cannot blame anybody else if we in 10 years time are not successful. This is up to us now to deliver in this. As I say to the team all the time, it's not going to be a quick journey, it will take years. But if we do the right things, there are all the potentials that these will be sizeable legs to stand on in the future for the Thule Group. From a pure reporting point of view, I therefore also want to update to you that the way we will report going forward as of Q2 is: the Active with Kids category of today, which is then bike trailers, bike seats, it's also strollers and child carrier backpacks, we will add the dog transport products and the car seats into a new bigger category called Juvenile and Pet Products. So that's going to be the new name for that category moving forward when we enter into this world of these emotional things. You see the cuddly little one – I'm closer to the grandchildren, I hope my daughters didn't listen to that, but I am closer to grandchildren than my own. But you remember that feeling: I remembered when you placed it in that stroller or car seat. So there's a lot of emotions in that. And when we talk about emotions, there is of course a connection not just to the product but to the brand. So to speak more about what we do in how we work with the brand, please welcome up on the stage our global brand responsible for the Thule brand, Tina Liselius.

Summarizing, it's very easy to look back and think that you can never be better than this. It's the opposite. The future is bright out there and we're very convinced that we will have a fantastic journey. So when we look at what we build on – 80 years of fantastic legacy – that is a strength that creates the optimism that we can continue to grow. And that's why we also, when we look at it, actually stick to the same strategy we've had a number of years. We're not changing anything. We're still driving that cultural entrepreneurial working grit with some daring to do new things but then having the grit to carry them out. We're still thinking long-term sustainability. We're still infatuated with products. We need to be efficient and smart and more automated in our factories. We are shoring up and driving the energy into the lifestyle brand of Thule. We are supporting our retail partners and we are definitely pushing out. That will continue to create strong growth also in the future, both top line and profits and cash generation. It will enable the possibility to further bolster that growth with the right acquisitions and hopefully, depending on what the market defines, it should create also shareholder returns. So when we then look at that, we are supported by five macro trends that we think are very key for us. One is the bike commuting macro trend. It is extremely strong with all the infrastructure investments that have been made; it will be continuing. A second one is as vehicles – electric vehicles are getting smaller and smaller – there will be this sustainable mindset. The times I needed to add more stuff to bring more stuff – a product from Thule enables you to have that small little electric vehicle for the everyday but when you want to have the weekend and get away, you can add that with transport solutions on the back of the car and other things to it as well. The staycationing trend wasn't a fad. It wasn't just during the pandemic. There is a long-term trend that people will do short weekends, long weekends, and more traveling close to their homes, and that will support our type of categories. My own generation – as I have to point out too often nowadays as the 55-plus generation – I am healthier than my father's generation at the same age. We are definitely more active. It's not only middle-aged men in lycra; there's a lot of general activity in the 55-plus. That healthy, active generation wanting to do things is growing and it fits our brand perfectly. And then finally, what we've been talking about, both the sustainability aspects but also the brand aspects, that consumers in the future will more and more judge that they want to align with the brands that they buy products from. And we are positioned with our long-term sustainable quality approach in exactly the way that those consumers will. That makes us comfortable also then to dial up our ambitions. So what we are doing is basing it on these trends that there will be things going on: there will be more outdoor and urban activities, there will be more staycationing, there will be a healthy active community that wants high quality brands. We've decided to up the ante on our goals. So what we are doing is – we only about a year ago quickly updated that goal. We presented a year ago a goal to double our 2020 sales by 2030. Since we did 7.8 billion SEK, that would have meant that we needed to deliver 15.6 billion SEK. Now a year later, hindsight is easy, we were not aggressive enough. We are now convinced that our 20 billion SEK goal is the right goal for 2030. We're basing that on two factors of why we're updating the goal and adding 4.4 billion SEK more in the ambition. One is the fact that we grew so much more in 2021 than was expected, so we've already caught up with about half of that with the growth that we did in 2021. Second part is that we can now be more open about the new categories we're going in and the size of those categories and what it will be for us in achieving also growth in those categories. So a new updated sales target of 20 billion SEK by 2030. We're maintaining our high EBIT margin of maintaining an EBIT margin over 20% throughout the period, and we're also maintaining a minimum 75% of annual net income which was updated a year ago. We are continuing with the very ambitious targets we've already set according to the Science Based Targets initiative. So we are generally amping up on the sales volume but the rest of the goals are remaining the same. So with that, I feel it is time for questions and answers. And to simplify it, we've made the logic that if people want to pose a question, they say who they are and the question. I probably then need to repeat it so people on the digital can hear it. And if I struggle to be able to answer it, I might pass it on to one of my colleagues. So with that, thank you all for listening in, and now we open the floor for questions and answers.

I'll take the first one. The size on the big, not big enough market to become a 1 billion – which is what we've defined – it is a very fast growing category. So by 2030 that category we are convinced will be significantly more sizable than 2 billion. So by that time it will be a much bigger market than 2 billion. But yes, due to the position of many small niche players, we are very convinced that we will be the global leading brand in that category. That's the ambition we have. So yes, it still matches our expectation by the end of that period to be a billion SEK category. If you take the second question, which was about car seats and would we be able to, having now been in strollers for a while, quicker get revenue growing? Clearly there is a huge advantage if you have a relationship with juvenile stores around the world where you have now been supplying them and you do know them and they do sell your product, then knocking on the door for the first time. But we are not underestimating even within the car seats field, it is still convincing that retailer to move another brand away from their home page or from their shelf. So it's not a given, but it's significantly easier when you have a relationship of course and a well-established relationship. Secondly, there is also a logic of if you look at our strength of knowing and being able to communicate that we know cars and safety of cars, we have two credibility plays at one go: one, the ongoing relationship with juvenile retailers because we sell strollers there; and two, because we are convincing as somebody who actually understands what happens in a car. So yes, should be a quicker start than strollers was definitely.

So the question for the digital crowd, if you didn't hear it, was that has the fact of not having car seats hampered our opportunities or growth rate in strollers in North America? Definitely. So due to the different way of using bassinets or infant solutions, clearly the case of not having a car seat associated with our own brand has held back from birth stroller sales in North America because most parents in North America go with the car seat and a car seat adapter. Partly also in Europe, not to the same extent though, because in Europe it is much more of a bassinet or cocoon type of approach and quite a few parents still do choose a different car seat brand. But clearly as you have seen by brands like Bugaboo who does partnerships with a brand called Nuna just to have a car seat so to speak, because it does strengthen you. So I think it will help in both regions but it will be a more significant help in North America.

The stuff is correct. There is a lot of specific component manufacturers that are very strong to supply to a lot of brands in the car seat category. We are always smart about not innovating something that doesn't need to be innovated. So we will combine actually some partnerships with some of the very trusted component suppliers that supply the leading brands of today but with some strong in-house development, in-house manufacturing capabilities, combining the both. So there's a bit of both. Yes, some of the most well-known brands are our suppliers of components. And at the same time, we are innovative with a lot of patents and we'll be doing some other things ourselves.

So seven years ago we launched strollers. And in those seven years, we can say that we are clearly still one of the smaller players but we're now on the top ten list. So there are two behemoths in strollers: it's Bugaboo in Europe and it's Uppababy in North America. And then there are some relatively sizable brands, and now we're starting to be one of those relatively sizable brands. So to the question, can we reach 1 billion in sales by 2030 in car seats with the same market share? Yes is the answer. So with the same market share as we have in strollers and gained over those seven years, we would definitely be above 1 billion in car seats by 2030.

There is a logic in saying that the more you can embrace a broader community doing activity, there is a higher likelihood that you can find more consumers wanting to do it. The way you tempt and taste it for them is of course to show that aspirational usage more than 'oh I need to bike to the kindergarten'. So even the parents that love our Thule Chariot because they're biking every day no matter rain or shine, what's going on, they actually prefer to see the image when they're biking on the beach with their children. So what we will do from a purely emotional buildup point of view, there is an attractiveness in that more refined outdoorsy feel. But you're absolutely right: by us being able to offer a broader everyday use where the stroller is a brilliant example, that is of course a way of finding more connection points where we can build that brand trust because you used it all the time. Some of that fact: I have the new Thule Vision collection luggage and one of the cool things when I came with the duffel bag is when you then meet your now adult girls at university and their friends, 'woah, that's a nice bag.' I don't get that reaction when I come rocking up with my car with the roof rack on it, I have to admit. So of course, clearly by broadening the portfolio to more everyday use product, we do get a brand strengthening as well.

So yes, it's correct. The dog cage for example is in a partly not as much as you would think because if you look at the dog product, you can say there's three main channels. One is a clear juvenile pet store channel. One is the classical large onliners, which is by far the biggest, by the way, where we already have fantastic well-established relationships. So that's the new part. And then the third one are the small pet specialists that are slightly different. But if you look at it, we feel very confident that we for the majority will immediately have access to where the majority of those type of products are being sold. For the bike related, we're 100% sure, but even for the car related dog products, for the vast majority of business today, it goes more to mainstream online channels rather than specialists. Then there is the specialist channel, and of course as this is the first day we announced it, my sales colleagues were very upset when we didn't tell them last week. They thought they would be told what the new categories were. Now they are. But if you look at it, first thing hitting the ground, ask them next week we will start knocking on those doors. And what we have proven, I think in an even more challenged category like juvenile, we are capable of getting into a new channel because we are a believable company in terms of high on-time in-full delivery performance. So if you do that and offer a great product – because if it isn't a great product, why would they bring us in and not the incumbent, so to speak – so I feel very comfortable that we will be able to establish ourselves in that part of the business channel as well. But the majority is actually going in a more generalist reality.

So if — yeah. So we as a company, we always put on our P&L our spend, so all the money we've been spending for these categories you've already seen in our annual reports, right, so far. And we have not anything in the balance sheet. All those people are already in the cost structures. And it is a huge sizeable team for car seats, I can tell you. And soon we will unveil what we needed to do in our test center to be able to go into car seats. So clearly, we are spending a lot of money into this, but we're already spending it. So that's not going to be dialed up in the future. It is already spent and being spent in the comparable numbers. If you take the dog related products, they are smaller than strollers. So size wise, car seats bigger, strollers there, and the dog related slightly smaller.

So the first question was which one should you've done earlier? And which one we won't tell you is the answer. It's nice to have it there but we won't tell you.

Yes, clearly. And here we have a fantastic team with fantastic insights of what is being developed in the car industry, and we have the relationships. But we are honest, we are pushing the brand and retail consumer product. That's our main mantra here. It's not to become an OE provider. It is Thule-branded, retail-focused entry into pet.

Cognizant of time and some people having trains to catch after the fantastic tour that we will have, I therefore propose the following: that we thank all the participants that have been listening into the digital event. You will now be seeing two fantastic films, one showing the roof rack facility in Hillerstorp and the automation investments we've done there, and the other one showing the place where we're sitting, in the midst of our fantastic expanded test center. So I ask the participants here to remain as I wave goodbye to the digital participants for watching the screen. Thank you for your attention.