Garden equipment and tools maker Husqvarna flagged a continued slow pickup in demand next year as it posted third-quarter profits that grew roughly in line with expectations from last year's low levels.

After anaemic 2009 sales as landscaping projects went on hold while retailers drew down inventories and revised supplier lists amid the global recession, prompting restructuring, things have started to brighten this year for Husqvarna.

Chief Executive Magnus Yngen believes the chainsaws, hedge-trimmers and lawn mowers makers' markets will grow some 2-3 percent in 2011, after low single-digit growth this year.

The company's biggest and second-biggest divisions Europe & Asia Pacific and Americas are likely to match or outgrow the markets, he told Reuters.

Operating profit in the seasonally slow third quarter was 411 million Swedish crowns ($61.7 million) against a mean forecast of 408 million in a Reuters poll and 173 million a year earlier. Sales rose 3 percent to 6.91 billion crowns, against expectations for roughly unchanged levels.[ID:nLDE69I1ZW]

"The major positive is that Europe & Asia Pacific is doing extremely well," said Swedbank analyst Claes Rasmuson.

"But the Americas is not. Here they made a loss, which was unexpected. The Americas is a concern, and there is no sign of any major pick-up," Rasmuson said.

End-user demand continued to recover in most markets in the quarter, but the Americas unit posted a 92 million crown ($13.82 million) operating loss due to lower sales and increased costs, Husqvarna said.

"Despite a recovery in the market, our sales for Americas decreased due to the reduced listings of low-end lawn mowers with a major retailer in North America for the 2010 season," it said.

Yngen said Husqvarna has, to a larger extent than expected, offset some of the volumes lost to that customer this year with higher volumes to other U.S. clients: "For most products, demand is up 6-8 percent this year. But the demand for chainsaws has fallen more than 10 percent."

Shares in the firm initially rose as high as 3.9 percent but eased to trade up 0.4 percent at 0947 GMT, while the Stockholm bourse blue-chip index .OMXS30 was down 0.3 percent.

Husqvarna said it expects continued positive development in the fourth quarter for Europe & Asia/Pacific and Construction, but falling shipments in Americas.

"In the fourth quarter, which is the smallest quarter of the year for the group, we expect group shipments to be slightly higher than in the fourth quarter of 2009," Chief Executive Magnus Yngen said in the report.

Swedbank's Rasmuson said: "They are entering the fourth quarter, which is always weak, with low inventories, which is good."