Interim report January – June 2017
Kai Wärn, President and CEO:
“The Husqvarna Group is continuing to implement its profitable growth strategy following the positive execution of its margin improvement activities in recent years. Sales, operating income and margin as well as cash flow increased in the first half of the year. The three divisions with growth targets had a very positive development, effectively capitalizing on an overall good demand in areas such as robotic mowers, battery-powered products and watering products. Going forward we will continue to invest in strategic growth initiatives to further strengthen our position. The Consumer Brands Division continues to focus on margin improvement where cost and efficiency measures, in parallel to increased product development, remain imperative. However due to the challenging U.S. retail market, the previously anticipated margin improvement is now expected to be slower.
Group net sales in the second quarter was 8% higher adjusted for currency and increased in all divisions. Operating income increased 16% to SEK 2,002m (1,729) due to the higher volume and a positive currency impact which was partially offset by higher costs for our growth initiatives. The operating margin for the Group continued to improve and was 15.3% (15.0) in the quarter and 9.6% (8.6) for the rolling twelve month period.
Sales in the Husqvarna Division increased 5% adjusted for currency, and the operating income rose 15% to SEK 1,186m (1,031). Europe continued as the growth driver largely as a result of good growth in battery-powered products including robotic lawn mowers. The Gardena Division added another quarter of strong performance. Sales increased with 11% adjusted for currency with growth in all product categories, particularly in watering. Operating income rose 26% to 565m (449).
From a sales perspective Consumer Brands also had a favorable development with top-line growth of 9%. Operating income however declined to SEK 80m (147), reflecting a challenging and competitive business environment in the North American retail market, as well as unfavorable product and regional mix. To further improve efficiency in the supply chain footprint, the quarter was impacted by one-time cost items of close to SEK 30m.
The Construction Division delivered another strong quarter, with currency adjusted sales growing 16%, whereof organic growth was 2%. Operating income increased 30% to SEK 233m (179). The acquisition of HTC, the floor grinding solutions market leader was finalized in May, further strengthening our product portfolio and ability to better serve our customers in the prioritized concrete surfaces and floors segment.”
Second quarter 2017
- Net sales increased to SEK 13,069m (11,504), corresponding to a currency adjusted* growth of 8%.
- Operating income increased 16% to SEK 2,002m (1,729), corresponding to a margin of 15.3% (15.0).
- Changes in exchange rates, net of raw material costs, positively impacted operating income by around SEK 110m.
- Operating working capital* as a percentage of net sales for the last twelve months was 26.8% (27.2).
- Earnings per share after dilution increased 11% to SEK 2.43 (2.19).
A combined press and telephone conference, hosted by Kai Wärn, President and CEO, and Jan Ytterberg, CFO, will be held at Husqvarna Group’s office, Regeringsgatan 28, Stockholm at 10:00 CET on July 18, 2017. To participate, please dial +46 (0) 8 5033 6434 (Sweden) or +44 (0) 8444933800 (UK) ten minutes prior to the start of the conference. The conference call will also be audio cast live on www.husqvarnagroup.com/ir. A replay will be available later the same day.
– Jan Ytterberg, CFO, +46 8 738 90 77
– Tobias Norrby, Investor Relations Manager, +46 8 738 93 35
This press release 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 08.00 CET on July 18, 2017.
Husqvarna Group is a global leading producer of outdoor power products and innovative solutions for forest, park and garden care. Products include chainsaws, trimmers, robotic lawn mowers and ride-on lawn mowers.
The Group is also the European leader in garden watering products and a global leader in cutting equipment and diamond tools for the construction and stone industries. The Group’s products and solutions are sold under brands including Husqvarna, Gardena, McCulloch, Poulan Pro, Weed Eater, Flymo, Zenoah and Diamant Boart via dealers and retailers to consumers and professionals in more than 100 countries. Net sales in 2016 amounted to SEK 36bn and the Group has around 13,000 employees in 40 countries.