INTERIM REPORT JANUARY - SEPTEMBER 2022

Sales growth in the quarter

Third quarter 2022

• Net sales increased by 20% to SEK 12,206m (10,180). Organic sales growth was 1%, changes in exchange rates contributed with 12% and acquisitions with 7%.
• Operating income was SEK 555m (926) and the operating margin 4.5% (9.1). Excluding items affecting comparability, operating income was SEK 601m (926) and the operating margin 4.9% (9.1).
• Items affecting comparability amounted to SEK -46m (0), and related to restructuring costs in Russia, see page 18.
• Earnings per share before dilution amounted to SEK 0.47 (1.10) and earnings per share after dilution amounted to SEK 0.47 (1.10).
• Cash flow from operations and investments was SEK -645m (985), the decrease was mainly related to lower operating income and negative cash flow from working capital changes. Direct operating cash flow was SEK 338m (1,764).
• Operating working capital / net sales amounted to 28.1% (21.3).

January – September 2022

• Net sales increased by 13% to SEK 43,683m (38,824). Organic sales growth was -3%, changes in exchange rates contributed with 8% and acquisitions with 8%.
• Operating income was SEK 4,779m (5,878) and the operating margin 10.9% (15.1). Excluding items affecting comparability, operating income was SEK 4,866m (5,863) and the operating margin 11.1% (15.1).
• Items affecting comparability amounted to SEK -87m (14), see page 18.
• Earnings per share before dilution amounted to SEK 5.83 (7.49) and earnings per share after dilution amounted to SEK 5.80 (7.46).
• Cash flow from operations and investments was SEK -1,165m (5,707). Direct operating cash flow was SEK 689m (4,782).
• Husqvarna Group acquired Heger, a leading company specialized in professional diamond tools for the European construction market.

Significant events after the quarter (see page 9 and separate press release)

• Husqvarna Group accelerates its strategic transformation by increasing investments into its key sustainable value creation levers: robotic mowers, battery, watering and professional products. In addition, the company will proactively exit approximately SEK 2bn in annual sales of low-margin petrol-powered consumer business by 2024 and make decisive structural changes.

• Cost savings will amount to approximately SEK 800m fully implemented in 2025, where then half of the cost savings will be reinvested into the sustainable value creation levers. Associated one-off costs are estimated to SEK 2bn (of which SEK 0.9bn are cash items). 

Strong growth in the robotic mower segment

“Net sales for the Group increased with 20% in the third quarter, whereof organic growth was 1%. Sales of robotic mowers was strong, achieving a high double digit growth. In addition, sales growth was good for solutions for professional customers, such as chain saws and diamond tools.

The Husqvarna Forest & Garden Division achieved an organic sales growth of 9%, driven by a strong performance for robotic mowers and professional hand held products. Organic sales growth in the Gardena Division was -20%, primarily due to inventory destocking among our retail partners through the end of the gardening season. The lower volumes had a significant negative impact on the profitability. The Husqvarna Construction Division reported organic growth of -2%, with good growth for diamond tools, while sales in other product categories was impacted by supply chain disturbances during the quarter.

Operating income for the third quarter, excluding items affecting comparability, amounted to SEK 601m (926). Price increases continued to offset higher raw material and logistics costs, while lower volumes accounted for the majority of the decrease in operating income. Direct operating cash flow declined to SEK 338m (1,764) for the quarter, due to lower operating income and negative cash flow from changes in working capital. The inventory levels have stabilized and we continue with our activities to manage the inventory.

Accelerating our strategic transformation

For a number of years, we have been on a journey to build a stronger Husqvarna Group by repositioning our business to become more premium and professional, while pivoting our offering towards more sustainable, smarter and more connected solutions. This improved business composition has led to higher growth and margins. To enhance performance mid- to long-term, it is imperative to purposely invest into robotic mowers, battery, watering and professional products, that have the largest potential for future value creation. Therefore an incremental SEK 400m per year, reached by 2025, will be invested into these segments.

Lowering our fixed cost base and exiting low-margin petrol-powered business 

As part of this shift, we will adjust our value chain for petrol-powered consumer products, including reducing the installed production capacity. We will exit approximately SEK 2bn in annual sales of low margin petrol-powered consumer products (by 2024). In addition, we will fast-track necessary capability shifts and at the same time increase organizational efficiency, simplify structures and reduce costs.

These measures will result in total annual cost savings of approximately SEK 800m fully effective in 2025 and net SEK 400m after the increased investments into the sustainable value creation levers.

We are executing on a winning strategy and I am proud of the achievements made by our organization so far on our transformation journey. It is now time to take the next step to make our company even more sustainable, competitive and stronger in these uncertain times and beyond.”


Henric Andersson, President and CEO
 

Webcast presentation and telephone conference

A webcast presentation of the Q3 report, hosted by Henric Andersson,

President & CEO, and Terry Burke, CFO, will be held at 10:00 CET on

October 21, 2022.

To view the presentation, please use the link:
https://husqvarna-group.creo.se/221021

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 2023

February 1  Year-end report 2022

April 20        Interim report for January-March 2023

July 18         Interim report for January-June 2023

October 20   Interim report for January-September 2023

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 October 21, 2022.

Tags: