First Quarter 2022
- Net sales increased by 12% to SEK 15,685m (14,030). The organic growth was -2%, changes in exchange rates contributed with 6% and the acquisition of Orbit Irrigation contributed with 8%.
- Operating income was SEK 2,159m (2,293) and the operating margin was 13.8% (16.3). Excluding items affecting comparability, operating income was SEK 2,190m (2,293) and the operating margin was 14.0% (16.3).
- Items affecting comparability amounted to a net of SEK -31m (0) and was related to a real estate sale of SEK +178m, integration costs for the Blastrac acquisition of SEK -90m and write-downs related to Russia and Ukraine of SEK -119m, see page 16.
- Earnings per share before dilution amounted to SEK 2.87 (2.89) and earnings per share after dilution amounted to SEK 2.86 (2.89).
- Cash flow from operations and investments was SEK -1,219m (1,548), the decrease was mainly related to higher paid tax and increased inventories. Direct operating cash flow was SEK -1,452m (143).
- Operating working capital / net sales amounted to 23.5% (22.5).
- Husqvarna Group appointed Terry Burke as new CFO, succeeding Glen Instone who is now President, Husqvarna Forest & Garden Division.
A Quarter with Strong Demand but Affected by Short-term Supply Chain Constraints
“Demand for our products and solutions was strong during the first quarter of the year, but sales have been constrained by disturbances in the supply chain. Sales of handheld and construction products as well as parts and accessories grew significantly while robotic and ride-on mowers were materially lower than last year. We are, in an uncertain environment, taking decisive measures together with suppliers and partners to resolve the supply chain constraints and expect gradual improvements throughout the gardening season.
Organic growth was -2% for the first quarter, with Husqvarna Forest & Garden Division delivering -7% whilst Gardena Division achieving organic growth of 5%. The Husqvarna Construction Division had a strong development in its core markets and reached an organic growth of 10%, mainly driven by high sales of power cutters and an overall continued favorable market for the construction industry. We have, for the acquired company Blastrac, successfully initiated the final step of the full integration and brand migration to the Husqvarna brand.
Operating profit for the first quarter amounted to SEK 2,190m (2,293). Price increases offset increased costs for raw materials and logistics, while higher strategic investments and lower volumes had a negative impact. Product mix and dilution from the acquired Orbit Irrigation had a negative impact on the operating margin. Direct operating cash flow amounted to SEK -1,452m (143).
The decline is related to higher inventories as we purposely increased the levels going into the year, but it is also impacted by the erratic supply of certain components which has led to higher component and semi-finished products inventory and increased lead-times for products in transit during the quarter.
Regarding the situation in Ukraine, we are monitoring the developments closely and our main priority is the safety and security of our employees. In addition, we have stopped all exports to and investments in Russia. Cost increases for raw materials, energy and transportation are expected to continue and therefore further price increases are being implemented.
Focus on Long-term Value Creation
Our focus is to build a stronger Group by diligently executing on our strategy to create long term sustainable value. We are well positioned in attractive segments and are successfully driving the transformation of our industry. The strategy and value creation potential has naturally not changed due to the short-term supply chain constraints. Our technology leadership in robotic mowers has been further strengthened with the launch of the AIM/LONA technology for the consumer market, the latest mapping and navigation technology that enables virtual garden maps and zone control. We have also announced that for 2023 we will launch a boundary wire free solution for the consumer market. In the professional segment, production of CEORA™ has commenced with the first products now having reached our customers. The Husqvarna Construction Division is ramping up sales of the K 1 PACE 94V battery power cutter with performance comparable to a fossil-fuel powered product.
Leading in Sustainability
We continue to deliver on our sustainability ambitions and are expanding our industry leadership. For example, we have achieved a reduction in CO₂ emissions across the value chain of -30% compared with our 2025 target of -35%. EcoLine, Gardena’s range of garden tools produced with a high share of recycled materials, is included in the four circular innovations that have been introduced in the market. We have also signed a SEK 5 bn sustainability-linked revolving credit facility to further integrate our sustainability ambitions throughout our operations.
In summary, strong customer demand continues and we are taking decisive measures together with our suppliers to resolve the current supply chain constraints. We expect gradual improvements throughout the gardening season and continue to execute on our strategy for sustainable value creation.”
