Interim report January – June 2018

Kai Wärn, President and CEO:
“Demand in the forest and garden markets was strong in the second quarter, following the slow, weather-impacted start to the season in the first quarter. Sales for the Group grew 7% currency adjusted in the quarter as all three profitable growth divisions continued to develop positively. Operating income for our three divisions in profitable growth increased, but this was more than offset by a weaker development for the Consumer Brands Division. Operating income was negatively impacted by higher raw material costs, a strained supply chain and continued investments in profitable growth initiatives. Altogether, the Group operating income of SEK 1,925m (2,002) was slightly below last year and the operating margin dropped to 13.5% (15.3).

Sales for the Husqvarna Division increased 6% adjusted for currency, driven by higher sales of robotic lawn mowers and other battery-powered products as well as of ride-on and walk behind lawnmowers. Operating income reached SEK 1,201m (1,180). The Gardena Division had another good quarter with double-digit growth as geographic expansion and product launches continued to yield strong sales. Operating income exceeded last year’s strong quarter, amounting to SEK 585m (565). Operating income for the Consumer Brands Division declined to SEK -37m (86), mainly burdened by raw material cost inflation and a continued challenging U.S. retail market environment.

The Construction Division continued to focus on delivering organic growth at the same time as the integration of acquired entities was finalized. The total currency adjusted sales growth was 16% in the quarter, of which 8% was organic, with a good sales development in all regions. Operating income increased to SEK 251m (233) while the margin declined as the acquired light compaction business has a lower operating margin.

Going forward we have decided to further increase focus and efforts on premium offerings under the core brands of Husqvarna and Gardena. Decisive steps are being taken to resolve the underperforming Consumer Brands Division, where our presence in certain low price point product segments and brands will be exited. As a consequence, the Consumer Brands Division will be reduced in size and the remaining parts folded into the Husqvarna and Gardena divisions. The external financial segment reporting will be changed as of January 1, 2019. Further details are expected to be communicated latest in conjunction with the announcement of the third quarter results in October.”

Second quarter 2018

• Net sales increased to SEK 14,270m (13,069), corresponding to a currency adjusted* increase of 7%.
• Operating income amounted to SEK 1,925m (2,002).
• Operating margin was 13.5% (15.3).
• Operating cash flow* declined to SEK 2,059m (3,634).
• Decision to further increase focus on core brands Husqvarna and Gardena and to restructure Consumer Brands Division (see page 5 and separate press release).

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 July 17, 2018. To participate, please dial +46 (0) 8 503 364 34 (Sweden) or +44 (0) 8 444 933 800 (UK) ten minutes prior to the start of the conference. Conference ID: Husqvarna or 3299492. 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

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 17, 2018.

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.