Interim report January - September 2016
Kai Wärn, President and CEO:
“The development for the seasonally slower third quarter was generally in line with expectations, with continued improvements in operating income and margin. Successful execution of efficiency measures continued to support earnings growth, offsetting unfavorable currency impact and at the same time creating headroom for investments in profitable growth initiatives in areas that will be key in the years to come. Operating income for the Group increased to SEK 431m (405) and the operating margin rose to 5.9% (5.5).
Sales in the Husqvarna Division increased 5% adjusted for currency, with the European market maintaining its solid growth trend. Operating income for the Division increased to SEK 368m (321) and the margin rose to 9.8% (9.1), mainly driven by the volume increase and operational improvements, however partly offset by adverse currency impact and costs for growth initiatives. The downturn in sales for the Gardena Division in the quarter was expected given the favorable weather conditions last year in Central Europe, but was limited to -6% following a successful launch of a new range of hand tools. Operating income decreased to SEK 50m (113) mainly as a consequence of the volume decline and a higher cost level due to the growth initiatives. On a year-to-date basis Gardena has increased sales by 9% adjusted for currency, reflecting the success in terms of expanded distribution and several new product introductions.
Cost reductions and efficiency enhancements in the Consumer Brands Division are progressing according to plan, however somewhat overshadowed by negative currency effects and the impact from lower sales which decreased by 10% adjusted for currency. The seasonal driven operating loss was reduced to SEK -80m (-119) and the margin improved to -5.2% (-7.0).
The Construction Division continued to deliver higher operating income and margin, despite a lower growth rate than in the previous quarters. Sales were 1% higher adjusted for changes in exchange rates, operating income increased to SEK 155m (144) and the corresponding margin rose to SEK 14.9% (14.1).
The Group’s financial targets for the coming years were communicated at the capital market day in September. Following recent years’ focus and successful execution of the margin improvement, stronger emphasis will be placed on profitable growth. The growth ambition is to exceed the average industry by around 1-2 percentage points annually. Our targets are to grow net sales by between 3-5% per year, to have an average operating margin of at least 10% and to achieve an operating working capital in relation to sales of below 25%. However, the Consumer Brands Division will continue to have the operating margin improvement as first priority.”
Third quarter 2016
- Net sales amounted to SEK 7,349m (7,307). Adjusted for changes in exchange rates, net sales decreased by 1%.
- Operating income increased to SEK 431m (405), despite unfavorable currency impact of around SEK -60m, and the corresponding margin increased to 5.9% (5.5).
- Net debt* decreased to SEK 6,454m (6,666) and the net debt/equity ratio improved to 0.45 (0.50).
- Earnings per share after dilution increased to SEK 0.36 (0.34).
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 October 20, 2016. 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. The information was submitted for publication, through the contact person set out above, at 08.00 CET on October 20, 2016.
Husqvarna Group is a world leading producer of outdoor power products for garden, park and forest 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 world 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 2015 amounted to SEK 36 billion and the Group has more than 13,000 employees in 40 countries.