Interim report January - March 2015
Kai Wärn, President and CEO:
"Since January 1, Husqvarna Group operates under a new brand-driven divisional structure. The new organization shall be seen as a proactive measure to position Husqvarna Group for the next phase 2016 and beyond, with a stronger focus on profitable growth. In 2015 however, the main focus will remain on operating margin recovery through the Accelerated Improvement Program (AIP).
Overall, the year has started well for us. Group operating income increased by 22% to SEK 1,112m (908), despite a currency adjusted sales decline of -3%. The corresponding operating margin rose to 10.2% (9.4). Even if total sales declined, the development in terms of divisional mix was positive. Sales increased 9% in both of our higher margin forest and garden divisions Husqvarna and Gardena. Consumer Brands’ sales were down by -21% predominantly reflecting a late start of the season due to another cold winter in the U.S., and our ambition to prioritize value before revenue. Construction was off to a slow start, mainly due to external reasons, but sales gradually improved and ended at an increase of 2% but with a significantly higher run-rate in March.
AIP continues to deliver according to plan and the trend of improving gross and operating margins for the Group remains. Margins were positively affected by continued impact from the two main components in our improvement program; Operational Excellence driven cost reductions and sales growth in our product leadership areas - the latter having a favorable impact on the mix. Some of the progress was offset by unfavorable volume impact due to the lower sales in Consumer Brands. On the other hand, income for the Group was supported by a positive impact from changes in exchange rates, as currency hedges offset most of the negative transaction effects.
The recent currency movements have helped us short term, but the longer-term impact, mainly referring to the strengthening of the USD, is expected to have a negative impact. So whereas operating income and margin recovery have been solid since the launch of the AIP program, additional improvement areas to balance the negative currency impact have been identified, such as indirect material and logistics as well as capacity and efficiency measures.”
First quarter, January - March
- Net sales increased by 13% to SEK 10,928m (9,685). Adjusted for exchange rate effects, net sales decreased -3%.
- Growth for Husqvarna, Gardena and Construction, while Consumer Brands declined substantially. - Operating income rose 22% to SEK 1,112m (908).
- Operational Excellence cost reductions and favorable divisional mix. - Positive short-term impact from changes in exchange rates amounting to SEK 107m.
- Earnings per share increased to SEK 1.37 (1.08).
- Operating cash flow amounted to SEK -2,410m (-1,969).
Telephone conference
A telephone conference, hosted by Kai Wärn, President and CEO, and Jan Ytterberg, CFO, will be held at 13:45 CET on April 21, 2015. To participate by phone, 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 www.husqvarnagroup.com/ir later the same day.
Contacts
Jan Ytterberg, CFO, +46 8 738 90 77
Tobias Norrby, Investor Relations Manager, +46 8 738 93 35
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 12:00 CET on April 21, 2015.
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.