Interim report January - June 2015

Kai Wärn, President and CEO:
“Husqvarna Group’s positive trend of performance improvement continues. Operating income increased by 22% in the second quarter to SEK 1,675m (1,373) and the operating margin rose to 13.7% (12.4). The development was primarily driven by continued growth for our higher margin divisions Husqvarna, Gardena and Construction, while Consumer Brands reported improved operating margin on a lower sales volume. The Accelerated Improvement Program continued to impact positively, as did impact from changes in exchange rates.

From a demand perspective, Europe experienced average weather conditions that turned favorable for watering products towards the end of the quarter, whereas in North America the season can at best be described as average.

In Husqvarna and Gardena, sales adjusted for changes in exchange rates increased by 4% and 3% respectively. Operating income and margin in the Husqvarna division increased to SEK 1,001m (818) and 17.5% (16.2), primarily as a result of the higher sales in combination with a positive product mix. Gardena’s operating income was essentially unchanged at SEK 397m (399) and the margin remained on a high level of 22.1% (23.3). Consumer Brands’ sales declined by 12% currency adjusted and volumes were negatively impacted by retailer inventory adjustments, more competitor promotional activity, and our stance giving priority to margin before volume. Material cost reductions contributed to an improvement of the operating income and margin for the Division to SEK 178m (97) and 4.9% (2.8). We foresee the sales development in Consumer Brands to continue. The lower volumes will put further pressure on the profitability in the division during the second half of the year. Construction rebounded as expected with sales growing a solid 9%, supporting an increase in operating income to SEK 160m (117) and a margin of 14.6% (13.2).

A key future offering area for Gardena is the smart gardening and a new concept will be launched 2016. It connects automatic watering and robotic lawn mowing in a unique way, allowing it to be managed by a smart phone application. As an acceleration and reinforcement of the initiative, the pioneering company Koubachi has been acquired, bringing vast experience and competence from automation within gardening and plant care.

By the end of the year the Accelerated Improvement Program will be concluded from an activity point of view. It has been a major driver of the margin improvement since its launch in 2013. The full financial impact of the program will be realized in 2016. In addition we are detailing further measures to support cost reductions in 2016 and 2017. The main target areas include indirect material, logistics, capacity as well as general efficiency measures. The objective is to release funds for investments to support profitable growth, which will be the focus beyond 2016 for three of our divisions, as well as mitigate the negative impact from the stronger USD going forward. For Consumer Brands the priority continues to be margin recovery.”

Second quarter:

• Net sales increased to SEK 12,263m (11,045). Adjusted for exchange rate effects, net sales decreased -1%.
• Operating income increased 22% to SEK 1,675m (1,373).
• Operating margin rose to 13.7% (12.4).
• Earnings per share after dilution increased by 18% to SEK 1.98 (1.68).
• Operating cash flow amounted to SEK 2,220m (2,282).

Telephone conference
A combined press and telephone conference, hosted by Kai Wärn, President and CEO, and Jan Ytterberg, CFO, will be held at Husqvarna’s office on Regeringsgatan 28 in Stockholm at 10:00 CET on July 17, 2015. To participate, please dial +46 (0) 8 5052 0110 (Sweden) or +44 (0)20 7162 0077 (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 at http://www.husqvarnagroup.com/ir later the same day.

This interim report comprises information which Husqvarna is required to disclose under the Securities Markets Act and/or the Financial Instruments Trading Act. It was released for publication at 08:00 CET on July 17, 2015.

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 world leading producer of outdoor power products including chainsaws, trimmers, robotic lawn mowers and garden tractors. 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 end-customers in more than 100 countries. Net sales in 2014 amounted to SEK 33 billion, and the Group had more than 14,000 employees in 40 countries.