INTERIM REPORT JANUARY - JUNE 2022

A quarter marked by continued supply chain constraints

Second quarter 2022

• Net sales increased by 8% to SEK 15,792m (14,614). The organic growth was -7%, changes in exchange rates contributed with 8% and acquisitions with 8% (growth numbers are rounded).

• Operating income was SEK 2,065m (2,659) and the operating margin was 13.1% (18.2). Excluding items affecting comparability, operating income was SEK 2,075m (2,645) and the operating margin was 13.1% (18.1).

• Items affecting comparability amounted to SEK -10m (14), and related to restructuring costs in Russia, see page 19.

• Earnings per share before dilution amounted to SEK 2.48 (3.49) and earnings per share after dilution amounted to SEK 2.47 (3.48).

• Cash flow from operations and investments was SEK 699m (3,174), the decrease was mainly related to lower operating profit and higher inventories. Direct operating cash flow was SEK 1,803m (2,875).

• Operating working capital / net sales amounted to 25.7% (21.1).

• Husqvarna Group acquired Heger, a leading company specialized in professional diamond tools for the European construction market.

January – June 2022

• Net sales increased by 10% to SEK 31,477m (28,644). The organic growth was -5%, changes in exchange rates contributed with 7% and acquisitions with 8%.

• Operating income was SEK 4,224m (4,952) and the operating margin was 13.4% (17.3). Excluding items affecting comparability, operating income was SEK 4,265m (4,938) and the operating margin was 13.5% (17.2).

• Items affecting comparability amounted to a net of SEK -41m (14), see page 19.

• Earnings per share before dilution amounted to SEK 5.35 (6.39) and earnings per share after dilution amounted to SEK 5.34 (6.37).

• Cash flow from operations and investments was SEK -520m (4,723). Direct operating cash flow was SEK 351m (3,018).
   

A quarter marked by continued supply chain constraints

“The overall demand for Husqvarna Group’s products and services was good during the second quarter. Sales of professional products in the Husqvarna Forest & Garden Division, as well as sales in the Husqvarna Construction Division were good. For ride-on mowers, the supply chain situation improved during the quarter and sales grew strongly. However, for robotic mowers to the residential market, supply chain constraints were exacerbated due to the COVID-related lockdowns in China. This affected our ability to meet customers’ demand and sales decreased significantly. Organic growth for the Group was -7% (14) and the equivalent growth excluding robotic mowers was -1% for the second quarter.

Organic growth amounted to -8% for the Husqvarna Forest & Garden Division and -10% for the Gardena Division in the second quarter. Sales for both divisions were adversely affected by the supply situation in robotics. In the Gardena Division, sales of watering products declined as a result of a delayed season start due to cold weather in combination with our retail partners in the European core markets started the year with relatively high inventory levels. The Husqvarna Construction Division achieved organic growth of 2%, in part driven by strong sales of power cutters.

Operating profit for the second quarter amounted to SEK 2,075m (2,645), excluding items affecting comparability. Price increases continued to offset increased costs for raw materials and logistics, while lower volumes impacted the result. The product mix was unfavorable with lower volumes of robotic mowers and watering solutions and higher volumes of ride-on mowers.

Direct operating cash flow amounted to SEK 1,803m (2,875) for the second quarter. The decline was related to lower operating profit as well as higher inventories of components in general, semi-finished products and goods in transit, all stemming from the unpredictable component supply environment. Our ambition is to reduce the inventory levels for the remainder of the year. Although, this will also be dependent on how the supply chain situation develops.

Focus on sustainable value creation
Our vibrant brands are well positioned in attractive segments and our unique innovation capability enables us to create value and deliver on our Sustainovate targets. Examples of progress on our sustainable value creation strategy are the strong growth of robotic mowers in the professional segment including the successful launch of CEORA™, the robotic mower that provides cost-efficient commercial turf care management. The Husqvarna Forest & Garden Division has also joined the Power for All Alliance we co-founded with Bosch, for consumer 18V battery-powered products, to complement its 36V offering. In the Husqvarna Construction Division, we have launched new ranges of dust extractors, both delivering improved construction site environments as well as a significant improvement in energy efficiency for our end-customers. We are delivering on our CO₂ emission reduction target, achieving a reduction across the value chain (scope 1, 2 and 3) of -30% compared with our 2025 target of -35%. This is despite an unfavorable product mix during the quarter.

In summary, the quarter was marked by continued disturbances in the supply chain. We are doing our utmost to support our customers for the remainder of the season, however the global supply chain situation is still fluid and unpredictable. We have a dedicated and flexible organization that, in parallel with the implementation of short-term measures, is executing on our strategy and our long-term value creation.”

Henric Andersson, President and CEO

Webcast presentation and telephone conference

A webcast presentation of the Q2 report, hosted by Henric Andersson, President & CEO, and Terry Burke, CFO, will be held at 10:00 CET on July 15, 2022.

To view the presentation, please use the link: https://husqvarna-group.creo.se/220715

The dial-in to the telephone conference (in order to ask questions): +46 (0) 8 5051 0031 (Sweden) or +44 207 107 06 13 (UK).
 

Dates for Financial Reports 2022
October 21      Interim report for January-September
 

Contacts

Terry Burke, CFO and Executive Vice President, Finance, IR & Communication, +46 8 738 90 00

Johan Andersson, Vice President, Investor Relations, +46 702 100 451

Husqvarna AB (publ), P.O. Box 7454, SE-103 92 Stockholm
Regeringsgatan 28, +46 8 738 90 00, www.husqvarnagroup.com

Reg. Nr: 556000-5331
NASDAQ OMX Stockholm: HUSQ A, HUSQ B
 

This report 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 07.30 CET on July 15, 2022.

 
Factors affecting forward-looking statements

This report contains forward-looking statements in the sense referred to in the American Private Securities Litigation Reform Act of 1995. Such statements comprise, among other things, financial goals, goals of future business and financial plans. These statements are based on present expectations and are subject to risks and uncertainties that may give rise to major deviations in the result due to several aspects. These aspects include, among other things: consumer demand and market conditions in the geographical areas and lines of business in which Husqvarna operates, the effects of currency fluctuations, downward pressure on prices due to competition, a material reduction in sales by important distributors, success in developing new products and in marketing, outcome of product responsibility litigation, progress in terms of reaching the goals set for productivity and efficient use of capital, successful identification of growth opportunities and acquisition objects, integration of these into the existing business and successful achievement of goals for making the supply chain more efficient.

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