Interim report January - September 2014

Kai Wärn, President and CEO:
“Husqvarna Group’s positive trend from the first half year continued into the seasonally smaller third quarter. Total Group sales increased by 3%, adjusted for changes in exchange rates.

Operating income for the third quarter increased by 46% to SEK 301m (206), and the margin rose to 4.4%, driven by improvements across all business areas. On Group level, the favorable development was supported by reduced material costs, higher sales volume and improved productivity. Cash flow was solid, and the net debt/equity ratio improved to 0.50 (0.57).

From a business area perspective, currency adjusted sales for Americas and Construction increased by 6% respectively, while Europe & Asia/Pacific was flat. In terms of earnings, Europe & Asia/Pacific reported higher results and improved margin, Americas’ turn-around showed steady progress reducing the operating loss in the quarter by more than half, and Construction sustained its profitable growth.

As previously communicated, the Group’s current focus is to increase the operating margin from approximately 5% in 2013 to 10% in 2016. On a year-to-date basis, the operating margin has improved by close to 2 percentage points. The positive development has largely been enabled by a successful execution of the Accelerated Improvement Program, which primarily aims to cut product cost by reducing material costs, and improve product mix by focusing on core brands and on products where the Group has leadership positions.

We are now taking the final steps of preparing for next season. Keeping the momentum in the execution of the Accelerated Improvement Program is the priority for 2015. In parallel, the new brand based organization will be fully operational as of January 1, 2015, and forms the base for taking steps towards expansion beyond 2015.

From a short term demand perspective, we expect the fourth quarter to show a stable development compared to the corresponding quarter prior year.”

Third quarter

• Net sales increased to SEK 6,785m (6,349). Adjusted for exchange rate effects, net sales increased 3%.
• Operating income increased 46% to SEK 301m (206). Sales, operating income and margin improved for all business areas.
• Earnings per share increased to SEK 0.31 (0.16).
• Operating cash flow amounted to SEK 1,286 (2,001).
• The net debt/equity ratio improved to 0.50 (0.57).

Telephone conference
A combined press and telephone conference, hosted by Kai Wärn, President and CEO, and Ulf Liljedahl, CFO, will be held at Husqvarna’s office on Regeringsgatan 28 in Stockholm at 10:00 CET on October 22, 2014. 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
Ulf Liljedahl, CFO, +46 8 738 94 42
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 08:00 CET on October 22, 2014.

Husqvarna Group
Husqvarna Group is the world’s largest producer of outdoor power products including robotic lawn mowers, garden tractors, chainsaws and trimmers. The Group is also the European leader in consumer watering products and one of the world leaders in cutting equipment and diamond tools for the construction and stone industries. The Group’s products and solutions are sold via dealers and retailers to both consumers and professional users in more than 100 countries. Net sales in 2013 amounted to SEK 30 billion, and the Group had 14,000 employees on average in more than 40 countries.