Interim report January – September 2018

Kai Wärn, President and CEO:
“The third quarter was largely characterized by a continuation of the warm and dry weather in central and northern Europe, that had a subdued effect on demand for lawn mowing products and services, while demand for watering products was positively affected. This was reflected in the decrease of net sales adjusted for changes in exchange rates in Husqvarna Division by 5% and the increase by 23% in Gardena Division. Net sales for the total Group increased 1% adjusted for changes in exchange rates.

Operating income for the Group, excluding items affecting comparability* referring to restructuring related costs, declined to SEK 225m (433). The lower income was affected by low demand for higher margin lawn mowing products and parts in the Husqvarna Division. Gardena benefitted from the warm and dry European weather that helped to prolong the season for watering products. Consumer Brands reported a slightly lower operating income affected by challenging raw material prices related to tariffs. Operating income for Construction was higher, however adjusted for prior year’s integration costs the operating income was unchanged.

As previously announced, we are now taking firm actions to address the underperforming Consumer Brands Division by exiting certain low-margin petrol-powered products mainly in North America and adjusting manufacturing capacity and central resources to reflect the less complex and more focused Group. The measures are expected to be accretive to the Group´s financial performance already from next year. The actions will also release resources and energy that can be focused on building on our strengths in premium offerings under the core brands of Husqvarna and Gardena in areas such as robotic lawnmowers, digitization and technology for battery powered products.

Following several years of strong financial improvements, 2018 will deviate from that trend. Hence, the highest priority for 2019 is to restore the improvement momentum. Key deliverables to accomplish this include realizing price increases, restoring the balance between the efficiency programs and costs for profitable growth activities and delivering the savings of the restructuring of Consumer Brands Division. A successful execution of these deliverables form the base to achieve the 10% operating margin target in 2019.”

Third quarter 2018

• Net sales increased to SEK 8,042m (7,449), corresponding to a currency adjusted* increase of 1%.
• Group operating income, excluding items affecting comparability* of SEK -349m referring to restructuring, decreased to SEK 225m (433).
• Operating cash flow* declined to SEK 628m (1,132).
• Restructuring measures related to Consumer Brands Division being executed (see page 5).

Telephone conference
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 19, 2018. To participate, please dial +46 (0) 8 566 184 30 (Sweden) or +44 (0) 8 448 228 902 (UK) ten minutes prior to the start of the conference. Conference ID: Husqvarna or 1693525. The conference call will also be audio cast live on www.husqvarnagroup.com/ir. A replay will be available later the same day.

Contacts
Jan Ytterberg, CFO, +46 8 738 90 77
Tobias Norrby, Investor Relations Manager, +46 8 738 93 35

Husqvarna Group
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 2017 amounted to SEK 39bn and the Group has around 13,000 employees in 40 countries.