Husqvarna

Solid cash flow in a quarter affected by weak market conditions

Second quarter 2024

• Net sales decreased by 9% to SEK 15,430m (16,976). Changes in exchange rates impacted with -1%.
• Planned exits of low-margin petrol-powered business impacted with -2%. Organic sales decreased by 6%.
• Operating income was SEK 1,899m (2,101) and the operating margin was 12.3% (12.4).
• Excluding items affecting comparability, the operating income amounted to SEK 1,906m (2,313) and the operating margin was 12.4% (13.6).
• Earnings per share before dilution amounted to SEK 2.22 (2.47) and earnings per share after dilution amounted to SEK 2.22 (2.46).
• Cash flow from operations and investments amounted to SEK 3,459m (4,432). Direct operating cash flow was SEK 3,917m (4,443). Cash flow was impacted by the planned reduction of trade receivables financing and adjusted for this, direct operating cash flow decreased by SEK 252m, compared to last year.

January – June 2024

• Net sales decreased by 12% to SEK 30,150m (34,143). Changes in exchange rates had a neutral effect.
• Planned exits of low-margin petrol-powered business impacted with -3%. Organic sales decreased by 9%.
• Operating income was SEK 3,830m (4,465) and the operating margin was 12.7% (13.1).
• Excluding items affecting comparability, the operating income amounted to SEK 3,837m (4,723) and the operating margin was 12,7% (13,8).
• Earnings per share before dilution amounted to SEK 4.54 (5.37) and earnings per share after dilution amounted to SEK 4.53 (5.35).
• Cash flow from operations and investments was SEK 2,403m (5,020). Direct operating cash flow was SEK 2,303m (4,204). Cash flow was impacted by the planned reduction of trade receivables financing and adjusted for this, direct operating cash flow improved by SEK 354m, compared to last year. 

Solid cash flow in a quarter affected by weak market conditions 
 
“During the second quarter, we continued executing on our strategy and strengthened our positions in segments such as robotic mowers for the professional market, consumer battery-powered products and parts and accessories. However, as the quarter progressed, the continued challenging macroeconomic environment and hence cautious consumer spending gradually impacted the business negatively. In combination with unfavorable weather conditions in Central Europe and North America, that significantly impacted Gardena’s watering business, the Group’s organic sales decreased by 6%. The operating income decreased to SEK 1,906m (2,313).This was primarily a result of lower sales volumes, product mix effects and low capacity utilization in our production. Our cost-savings programs are progressing as planned, with savings of SEK 215m in the quarter.

Direct operating cash flow amounted to SEK 3.9bn (4.4) for the quarter with a significant contribution from our active efforts to reduce inventory levels, which in turn has decreased by SEK 3.2bn. Since second half of 2023 we have stopped using trade receivables financing. The effect on cash flow this quarter was approximately SEK -0.3bn and we expect a positive effect from this going forward.

Organic sales in the Husqvarna Forest & Garden Division decreased by 6% during the quarter. Growth was strong in robotic mowers for the professional market, driven by Husqvarna CEORATM. In addition, the segments consumer battery-powered products and parts and accessories performed well. In robotic mowers for the residential market, growth was strong for the Husqvarna Automower® NERA range, which was further expanded with two boundary wire-free models this season. The successful range now comprises five models, which together accounted for approximately one third of our residential robotic mower sales in the quarter. Sales of petrol-powered wheeled products remained at a low level, due to lower demand and the fact that we are proactively exiting parts of the segment in North America. Operating margin improved in the quarter, driven by our cost savings.

In the Gardena Division, organic sales decreased by 9%. Sales started well in the quarter but the watering business was significantly impacted by unfavorable weather conditions in Central Europe and North America, resulting in lower end-user demand.
 
Organic sales in the Husqvarna Construction Division decreased by 3% in the quarter, where sales were stable in Europe, decreased in North America and grew in emerging markets.

Executing on strategy 
We remain committed to our strategy and ongoing transformation where we focus on the high-growth areas of robotics, battery, smart watering and professional solutions. An efficient and sustainable cost base ensures delivery on our ambitions. To mitigate the near-term macroeconomic dynamics, we are now accelerating the existing cost-savings programs. 

In terms of sustainability and reduction of our overall CO₂ footprint, our emissions (Scope 1, 2 and 3) have decreased by -56% compared with the base year of 2015. This means that we have exceeded our target of a -35% reduction by 2025. 

In summary, despite the challenging market conditions in the quarter, our strategic focus and execution of cost efficiencies continues. This will enable us to continue to create sustainable value.”

Pavel Hajman, CEO
 

Webcast presentation and telephone conference
A webcast presentation of the Q2 report hosted by Pavel Hajman, CEO and Terry Burke, CFO will be held at 10:00 CET on July 18, 2024.

To view the presentation, please use the link: 
husqvarnagroup.creo.se/8080f1ee-635c-4505-8f81-a5c393bb2868

The dial-in to the telephone conference (in order to ask questions):
+46 (0) 8 505 100 31 (Sweden) or +44 207 107 06 13 (UK)

Dates for Financial Reports 2024
October 23    Interim report for January-September 2024

Contacts
Terry Burke, CFO and Executive Vice President, Finance, IR & Communication 
+46 8 738 90 00

Johan Andersson, Vice President, Investor Relations 
+46 702 100 451

Husqvarna AB (publ), P.O. Box 7454, SE-103 92 Stockholm
Regeringsgatan 28, +46 8 738 90 00, www.husqvarnagroup.com

Reg. Nr: 556000-5331
NASDAQ OMX Stockholm: HUSQ A, HUSQ B

This report contains insider information that Husqvarna AB is required to disclose under the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the contact person set out above, at 07.00 CET on July 18, 2024