INTERIM REPORT JANUARY - JUNE 2020
Henric Andersson, President & CEO:
“We have delivered a very good quarter. After a challenging start, given the Covid-19 situation, demand accelerated quickly as markets gradually reopened and consumers showed a high interest in lawn and garden products. We improved our operating margin to 16.3% (15.4) in the quarter driven by temporary cost avoidance activities and a favorable product mix.
Net sales grew by 3% when adjusting for Consumer Brands exits and changes in exchange rates. We achieved growth in key categories such as watering, robotics & battery, handheld products and aftermarket & accessories. Husqvarna Division’s adjusted* net sales decreased by 2% in the quarter, but showed strong growth in June. The Gardena Division delivered an adjusted* growth of 24%, with particularly strong performance for watering products, mainly supported by the reopening in their main markets and by the impact of Covid-19 on people’s buying patterns. The market situation for the Construction Division strengthened during the latter part of the quarter, but in total sales declined by 18%, adjusted for changes in exchange rates. Overall, we have secured a strong financial position and our direct operating cash flow amounted to SEK 2.3 billion (2.1) for the first half year.
Our Covid-19 strategy has been effective in protecting our employees and safeguarding the continuity of our business. We have experienced an extreme volatility during the quarter, from quickly deteriorating demand to a surge in demand. We have also taken decisive steps to mitigate the financial impact by applying temporary cost avoidance measures which were instrumental to deliver the second quarter result. We will now gradually increase our investments in some of the earlier paused strategic initiatives to support future profitable growth. Demand has continued to stay strong at the very start of the third quarter but as in previous years the peak of the lawn and garden season has passed. Given the considerable uncertainty about the global economic recovery, our dedicated work to navigate the complexities of the Covid-19 situation continues.
The Group strategy focusing on the customer experience, services & solutions, robotics & battery as well as developing our core offering, remains our foundation, and we will further sharpen areas such as our go-to market approach. Related to that, we are testing concepts such as robotics as a service models as well as the new Husqvarna EPOS technology, which allows for mowing with virtual boundaries, in selective markets. In the Gardena Division we have just announced that we are a co-founder of a multi-brand consumer battery alliance, “Power for All”, providing customers a solution with having one single battery for their electrical maintenance products at their home. This amplifies our electrification ambitions specifically in the 18V consumer segment.
To continue to make real difference through leadership in sustainability we have joined the global group of leading companies to commit to the Business Ambition for 1.5 °C to limit global temperature rise and our carbon target in our Sustainovate 2025 program has been approved as Science Based Targets. In addition, I would like to sincerely thank all our colleagues around the world for their tremendous work despite the circumstances. This period has truly demonstrated our organizations’ agility, cooperation and extraordinary commitment.”
* Net sales growth adjusted for Consumer Brands exits and changes in exchange rates.
Second quarter 2020
- Net sales decreased by 2% to SEK 13,482m (13,789). Net sales increased by 3% when adjusted for exit of Consumer Brands business and changes in exchange rates.
- Operating income amounted to SEK 2,191m (2,125), representing a margin of 16.3% (15.4).
- Earnings per share after dilution amounted to SEK 2.74 (2.63).
- Direct operating cash flow*, for the first half 2020, amounted to SEK 2,330m (2,084).
Telephone conferenceA conference call, hosted by Henric Andersson, President & CEO, and Glen Instone, CFO, will be held at 11:00 CET on July 16, 2020. To participate, please dial +46 (0) 8 505 583 52 (Sweden) or +44 333 300 9035 (UK) ten minutes prior to the start of the conference. Conference ID: Husqvarna. The conference call is also available through https://husqvarna-group.creo.se/200716. A replay will be available later the same day.
Glen Instone, CFO, Senior Vice President, Finance, IR & Communication, +46 8 738 90 00
- Johan Andersson, Director, Group Corporate Communications and Investor Relations, +46 702 100 451
This information is such that Husqvarna AB must disclose in accordance with the Securities Market Act. The information was submitted for publication on July 16, 2020, at 07:30 CET.