HUSQVARNA REPORTS ADJUSTED NET SALES UP 3% IN 2Q 2020
Jul. 20, 2020
Source: Husqvarna news release
"We have delivered a very good quarter," says Henric Andersson, president & CEO. "After a challenging start, given the COVID-19 situation, demand accelerated quickly as markets gradually reopened and consumers showed a high interest in lawn and garden products. We improved our operating margin to 16.3% (15.4) in the quarter driven by temporary cost avoidance activities and a favorable product mix."
Second Quarter 2020
Net sales decreased by 2% to SEK 13,482m (13,789) or $1.5 billion. Net sales increased by 3% when adjusted for exit of Consumer Brands business and changes in exchange rates.
Operating income amounted to SEK 2,191m (2,125) or $242 million, representing a margin of 16.3% (15.4).
Direct operating cash flow,* for the first half 2020, amounted to SEK 2,330m (2,084) $257 million.
Net sales grew by 3% when adjusting for Consumer Brands exits and changes in exchange rates. The company achieved growth in key categories such as watering, robotics & battery, handheld products and aftermarket & accessories. Husqvarna Division's adjusted* net sales decreased by 2% in the quarter, but showed strong growth in June. The Gardena Division delivered an adjusted* growth of 24%, with particularly strong performance for watering products, mainly supported by the reopening in main markets and by the impact of COVID-19 on people's buying patterns. The market situation for the Construction Division strengthened during the latter part of the quarter, but in total sales declined by 18%, adjusted for changes in exchange rates. Overall, the company has secured a strong financial position and its direct operating cash flow amounted to SEK 2.3 billion (2.1) or $254 million for the first half year.
"Our COVID-19 strategy has been effective in protecting our employees and safeguarding the continuity of our business," says Andersson. "We have experienced an extreme volatility during the quarter, from quickly deteriorating demand to a surge in demand. We have also taken decisive steps to mitigate the financial impact by applying temporary cost avoidance measures which were instrumental to deliver the second quarter result. We will now gradually increase our investments in some of the earlier paused strategic initiatives to support future profitable growth. Demand has continued to stay strong at the very start of the third quarter but as in previous years the peak of the lawn and garden season has passed. Given the considerable uncertainty about the global economic recovery, our dedicated work to navigate the complexities of the COVID-19 situation continues.
"The Group strategy focusing on the customer experience, services & solutions, robotics & battery as well as developing our core offering, remains our foundation, and we will further sharpen areas such as our go-to market approach. Related to that, we are testing concepts such as robotics as a service models as well as the new Husqvarna EPOS technology, which allows for mowing with virtual boundaries, in selective markets. In the Gardena Division we have just announced that we are a co-founder of a multi-brand consumer battery alliance, 'Power for All,' providing customers a solution with having one single battery for their electrical maintenance products at their home. This amplifies our electrification ambitions specifically in the 18V consumer segment.
"To continue to make real difference through leadership in sustainability we have joined the global group of leading companies to commit to the Business Ambition for 1.5 °C (34.7°F) to limit global temperature rise and our carbon target in our Sustainovate 2025 program has been approved as Science Based Targets. In addition, I would like to sincerely thank all our colleagues around the world for their tremendous work despite the circumstances. This period has truly demonstrated our organizations' agility, cooperation and extraordinary commitment."
* Net sales growth adjusted for Consumer Brands exits and changes in exchange rates.