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Husqvarna Group Q2 Results Presentation

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Husqvarna Group
Husqvarna Group

- Operating income for Q2 2015 was up 22% to SEK 1,675m compared to SEK 1,373m in Q2 2014, with the operating margin improving 1.3 percentage points to 13.7%. - High margin divisions like Husqvarna and Gardena saw growth in net sales. - Continued benefits from the Accelerated Improvement Program and currency exchange rates led to improved performance. - Product mix was improved through a focus on higher profit products and reducing material costs. - Further cost reductions planned for 2016-17 to fund growth investments and mitigate currency impacts going forward.

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Q2 2015 results presentation 2015-07-17
Summary, Q2 2015 • Continued trend of improved performance – Operating income up 22% to SEK 1,675m (1,373) – Operating margin improved 1.3 p.p. to 13.7% • High margin divisions growing net sales • Continued positive impact from Accelerated Improvement Program and changes in exchange rates - Product mix improvement driven by profit pool focus and material cost reductions • Further cost reductions in 2016-17 to release funds for investments in profitable growth activities and to mitigate unfavorable currency impact going forward 2
Financial highlights Q2 2015, Group • Sales declined -1% (currency adjusted) – Higher in all divisions, except for Consumer Brands • EBIT rose by 22% to SEK 1,675m (1,373) – AIP / profit pool focus drives mix improvements – Favorable EBIT currency impact of approx. SEK 100m • Operating margin improved 1.3 p.p. to 13.7% 3 SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 12,263 11,045 11 -1 23,191 20,730 12 -2 35,299 32,838 Gross margin, % 31.1 31.0 - - 29.3 28.9 - - 28.8 28.5 EBIT 1,675 1,373 22 12 2,787 2,281 22 10 2,087 1,581 Excl. impairment 1,675 1,373 22 12 2,787 2,281 22 10 2,854 2,348 EBIT margin, % 13.7 12.4 - - 12.0 11.0 - - 5.9 4.8 Excl. impairment, % 13.7 12.4 - - 12.0 11.0 - - 8.1 7.2 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
Husqvarna Division Q2 2015 • Sales increased 4% (currency adjusted) – Europe: product leadership areas robotic mowers and handheld products showed good growth – Asia/Pacific and Latin America: higher sales – North America: lower sales in Q2, but higher over H1 • EBIT rose by 22% to SEK 1,001m (818) – Favorable sales volume impact – Positive product mix development • EBIT margin increased 1.3.pp to 17.5% 4 SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 5,727 5,038 14 4 11,069 9,396 18 6 17,122 15,449 EBIT 1,001 818 22 16 1,898 1,485 28 19 2,421 2,008 EBIT margin, % 17.5 16.2 - - 17.1 15.8 - - 14.1 13.0 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
Gardena Division Q2 2015 5 • Sales increased 3% (currency adjusted) – Expanded distribution: listings and customers – Good development for robotic mowers – Warm weather in June supported demand for watering products • EBIT in line with prior year Q2, which was a strong quarter for watering • Acquisition of Koubachi to strengthen future product offering in Smart Garden, connecting watering and gardening solutions SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 1,795 1,712 5 3 3,114 2,864 9 5 4,462 4,212 EBIT 397 399 0 -3 601 576 4 0 408 383 EBIT margin, % 22.1 23.3 - - 19.3 20.1 - - 9.1 9.1 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
Now gardening is getting smarter 6 Building on experience and current trends • Provide convenience, freedom and inspiration to passionate gardeners • Gardena‘s history of successful system launches since 1968 • Dynamic development of Internet of Things applications • Unique offering of both automatic watering and robotic lawn mowing Koubachi to be integrated in Gardena Division Switzerland-based pioneer and leader in smart garden space Competence team will increase and accelerate value of Gardena‘s own smart gardening concept Saving Time Control Perfect Care Introducing GARDENA smart system™ in 2016
Consumer Brands Division Q2 2015 7 • Sales declined -12% (currency adjusted) – Lower sales in North America and Europe – Generally, value prioritized before volume – Retailer inventory reductions – Aggressive competitor promotions • EBIT and margin increased – Continued AIP material cost reductions and SG&A efficiency – Lower absorption of fixed costs due to the lower volume – Favorable currency impact SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 3,643 3,410 7 -12 6,986 6,803 3 -17 10,021 9,838 EBIT 178 97 84 21 167 141 19 -28 -129 -155 EBIT margin, % 4.9 2.8 - - 2.4 2.1 - - -1.3 -1.6 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
Construction Division Q2 2015 8 • Sales increased 9% (currency adjusted) – Strong development in North America, which rebounded after the external disturbances in Q1 – Higher sales in Europe – Good growth in floor grinding • EBIT and margin increased – Positive sales volume impact – Sales, service and product development investments on a higher level – Favorable currency impact SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 1,098 885 24 9 2,022 1,667 21 5 3,694 3,339 EBIT 160 117 37 18 234 198 18 2 390 354 EBIT margin, % 14.6 13.2 - - 11.6 11.9 - - 10.6 10.6 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
Consolidated income statement 9 SEKm Q2 2015 Q2 2014 Jan-Jun 2015 Jan-Jun 2014 FY 2014 Net sales 12,263 11,045 23,191 20,730 32,838 Cost of goods sold -8,446 -7,620 -16,398 -14,748 -23,488 Gross income 3,817 3,425 6,793 5,982 9,350 Gross margin, % 31.1 31.0 29.3 28.9 28.5 Selling expense -1,718 -1,714 -3,185 -3,038 -5,626 Administrative expense -424 -351 -821 -676 -1,392 Other operating income/expense 0 13 0 13 16 Impairment of goodwill - - - - -767 Operating income 1 1,675 1,373 2,787 2,281 1,581 Operating margin, % 13.7 12.4 12.0 11.0 4.8 Financial items, net -139 -110 -194 -206 -325 Income after financial items 1,536 1,263 2,593 2,075 1,256 Margin, % 12.5 11.4 11.2 10.0 3.8 Income tax -393 -296 -662 -488 -432 Income for the period 1,143 967 1,931 1,587 824 Basic earnings per share, SEK 1,99 1.68 3,36 2.76 1.43 Diluted earnings per share, SEK 1,98 1.68 3,35 2.76 1.43 1 Of which depreciation, amortization and impairment -277 -238 -538 -469 -1,734
26,8% 30,3%30,3% 29,5% 27,0% 28,9% 27,7%27,8% 26,7% 28,7% 27,7% 25,2%25,2% 28,3% 26,3% 25,1% 26,4% 31,0% 29,0% 26,3% 27,2% 31,1% 20% 23% 26% 29% 32% 20% 25% 30% 35% 40% Q12010 Q22010 Q32010 Q42010 Q12011 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q32013 Q42013 Q12014 Q22014 Q32014 Q42014 Q12015 Q22015 LTMQuarter Gross profit margin, % Q Gross profit margin, % LTM Gross margin development 10 Gross margin negatively impacted by transaction effects of approx. 1 p.p. Y-o-Y 2015
Consolidated balance sheet 11 SEKm 30 Jun 2015 30 Jun 2014 31 Dec 2014 Non-current assets 15,867 15,094 15,748 Inventories 7,874 6,704 7,709 Trade receivables 6,688 6,457 2,898 Other current assets 591 716 716 Liquid funds 2,248 2,330 2,105 Total assets 33,268 31,301 29,176 Total equity 12,961 12,497 12,088 Interest-bearing liabilities incl. dividend payable 8,638 8,525 7,504 Pension liabilities 1,756 1,408 1,835 Provisions 2,816 2,412 2,550 Trade payables 4,103 3,686 3,154 Other current liabilities 2,994 2,773 2,045 Total equity and liabilities 33,268 31,301 29,176
Operating cash flow 12 -3,000 -2,000 -1,000 0 1,000 2,000 3,000 Q1 Q2 Q3 Q4 SEKm 2015 2014 2013
0.00 0.30 0.60 0.90 1.20 1.50 1.80 2.10 2.40 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 Net Debt / EquitySEKm Net debt Equity Net debt / equity Net debt and equity 13
Key figures 14 Q2 2015 Q2 2014 Jan-Jun 2015 Jan-Jun 2014 Full-year 2014 Net sales, SEKm 12,263 11,045 23,191 20,730 32,838 Gross margin, % 31.1 31.0 29.3 28.9 28.5 Operating income, SEKm 1,675 1,373 2,787 2,281 1,581 Excl. items affecting comparability 1,675 1,373 2,787 2,281 2,348 Operating margin, % 13.7 12.4 12.0 11.0 4.8 Excl. items affecting comparability 13.7 12.4 12.0 11.0 7.2 Working capital, SEKm - - 6,716 6,276 5,066 Return on capital employed, % - - 9.6 10.5 7.6 Return on equity, % - - 9.2 11.6 6.7 Earnings per share after dilution, SEK 1.98 1.68 3.35 2.76 1.43 Capital turn-over rate, times - - 1.7 1.7 1.7 Operating cash flow, SEKm 2,220 2,282 -190 322 1,425 Net debt/equity ratio - - 0.63 0.61 0.60 Capital expenditure, SEKm 365 296 608 588 1,386 Average number of employees 15,295 16,128 14,693 15,714 14,337
Summary, Q2 2015 • Continued trend of improved performance – Operating income up 22% to SEK 1,675m (1,373) – Operating margin improved 1.3 p.p. to 13.7% • High margin divisions growing net sales • Continued positive impact from Accelerated Improvement Program and changes in exchange rates - Product mix improvement driven by profit pool focus and material cost reductions • Further cost reductions in 2016-17 to release funds for investments in profitable growth activities and to mitigate unfavorable currency impact going forward 15
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Husqvarna Group Q2 Results Presentation

  • 1. Q2 2015 results presentation 2015-07-17
  • 2. Summary, Q2 2015 • Continued trend of improved performance – Operating income up 22% to SEK 1,675m (1,373) – Operating margin improved 1.3 p.p. to 13.7% • High margin divisions growing net sales • Continued positive impact from Accelerated Improvement Program and changes in exchange rates - Product mix improvement driven by profit pool focus and material cost reductions • Further cost reductions in 2016-17 to release funds for investments in profitable growth activities and to mitigate unfavorable currency impact going forward 2
  • 3. Financial highlights Q2 2015, Group • Sales declined -1% (currency adjusted) – Higher in all divisions, except for Consumer Brands • EBIT rose by 22% to SEK 1,675m (1,373) – AIP / profit pool focus drives mix improvements – Favorable EBIT currency impact of approx. SEK 100m • Operating margin improved 1.3 p.p. to 13.7% 3 SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 12,263 11,045 11 -1 23,191 20,730 12 -2 35,299 32,838 Gross margin, % 31.1 31.0 - - 29.3 28.9 - - 28.8 28.5 EBIT 1,675 1,373 22 12 2,787 2,281 22 10 2,087 1,581 Excl. impairment 1,675 1,373 22 12 2,787 2,281 22 10 2,854 2,348 EBIT margin, % 13.7 12.4 - - 12.0 11.0 - - 5.9 4.8 Excl. impairment, % 13.7 12.4 - - 12.0 11.0 - - 8.1 7.2 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
  • 4. Husqvarna Division Q2 2015 • Sales increased 4% (currency adjusted) – Europe: product leadership areas robotic mowers and handheld products showed good growth – Asia/Pacific and Latin America: higher sales – North America: lower sales in Q2, but higher over H1 • EBIT rose by 22% to SEK 1,001m (818) – Favorable sales volume impact – Positive product mix development • EBIT margin increased 1.3.pp to 17.5% 4 SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 5,727 5,038 14 4 11,069 9,396 18 6 17,122 15,449 EBIT 1,001 818 22 16 1,898 1,485 28 19 2,421 2,008 EBIT margin, % 17.5 16.2 - - 17.1 15.8 - - 14.1 13.0 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
  • 5. Gardena Division Q2 2015 5 • Sales increased 3% (currency adjusted) – Expanded distribution: listings and customers – Good development for robotic mowers – Warm weather in June supported demand for watering products • EBIT in line with prior year Q2, which was a strong quarter for watering • Acquisition of Koubachi to strengthen future product offering in Smart Garden, connecting watering and gardening solutions SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 1,795 1,712 5 3 3,114 2,864 9 5 4,462 4,212 EBIT 397 399 0 -3 601 576 4 0 408 383 EBIT margin, % 22.1 23.3 - - 19.3 20.1 - - 9.1 9.1 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
  • 6. Now gardening is getting smarter 6 Building on experience and current trends • Provide convenience, freedom and inspiration to passionate gardeners • Gardena‘s history of successful system launches since 1968 • Dynamic development of Internet of Things applications • Unique offering of both automatic watering and robotic lawn mowing Koubachi to be integrated in Gardena Division Switzerland-based pioneer and leader in smart garden space Competence team will increase and accelerate value of Gardena‘s own smart gardening concept Saving Time Control Perfect Care Introducing GARDENA smart system™ in 2016
  • 7. Consumer Brands Division Q2 2015 7 • Sales declined -12% (currency adjusted) – Lower sales in North America and Europe – Generally, value prioritized before volume – Retailer inventory reductions – Aggressive competitor promotions • EBIT and margin increased – Continued AIP material cost reductions and SG&A efficiency – Lower absorption of fixed costs due to the lower volume – Favorable currency impact SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 3,643 3,410 7 -12 6,986 6,803 3 -17 10,021 9,838 EBIT 178 97 84 21 167 141 19 -28 -129 -155 EBIT margin, % 4.9 2.8 - - 2.4 2.1 - - -1.3 -1.6 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
  • 8. Construction Division Q2 2015 8 • Sales increased 9% (currency adjusted) – Strong development in North America, which rebounded after the external disturbances in Q1 – Higher sales in Europe – Good growth in floor grinding • EBIT and margin increased – Positive sales volume impact – Sales, service and product development investments on a higher level – Favorable currency impact SEKm Q2 2015 Q2 2014 As reported Adjusted1 Jan-Jun 2015 Jan-Jun 2014 As reported Adjusted1 LTM2 FY 2014 Net sales 1,098 885 24 9 2,022 1,667 21 5 3,694 3,339 EBIT 160 117 37 18 234 198 18 2 390 354 EBIT margin, % 14.6 13.2 - - 11.6 11.9 - - 10.6 10.6 1 Adjusted for currency translation effects. 2 Last tw elve months rolling % change, Q2 % change, H1
  • 9. Consolidated income statement 9 SEKm Q2 2015 Q2 2014 Jan-Jun 2015 Jan-Jun 2014 FY 2014 Net sales 12,263 11,045 23,191 20,730 32,838 Cost of goods sold -8,446 -7,620 -16,398 -14,748 -23,488 Gross income 3,817 3,425 6,793 5,982 9,350 Gross margin, % 31.1 31.0 29.3 28.9 28.5 Selling expense -1,718 -1,714 -3,185 -3,038 -5,626 Administrative expense -424 -351 -821 -676 -1,392 Other operating income/expense 0 13 0 13 16 Impairment of goodwill - - - - -767 Operating income 1 1,675 1,373 2,787 2,281 1,581 Operating margin, % 13.7 12.4 12.0 11.0 4.8 Financial items, net -139 -110 -194 -206 -325 Income after financial items 1,536 1,263 2,593 2,075 1,256 Margin, % 12.5 11.4 11.2 10.0 3.8 Income tax -393 -296 -662 -488 -432 Income for the period 1,143 967 1,931 1,587 824 Basic earnings per share, SEK 1,99 1.68 3,36 2.76 1.43 Diluted earnings per share, SEK 1,98 1.68 3,35 2.76 1.43 1 Of which depreciation, amortization and impairment -277 -238 -538 -469 -1,734
  • 11. Consolidated balance sheet 11 SEKm 30 Jun 2015 30 Jun 2014 31 Dec 2014 Non-current assets 15,867 15,094 15,748 Inventories 7,874 6,704 7,709 Trade receivables 6,688 6,457 2,898 Other current assets 591 716 716 Liquid funds 2,248 2,330 2,105 Total assets 33,268 31,301 29,176 Total equity 12,961 12,497 12,088 Interest-bearing liabilities incl. dividend payable 8,638 8,525 7,504 Pension liabilities 1,756 1,408 1,835 Provisions 2,816 2,412 2,550 Trade payables 4,103 3,686 3,154 Other current liabilities 2,994 2,773 2,045 Total equity and liabilities 33,268 31,301 29,176
  • 14. Key figures 14 Q2 2015 Q2 2014 Jan-Jun 2015 Jan-Jun 2014 Full-year 2014 Net sales, SEKm 12,263 11,045 23,191 20,730 32,838 Gross margin, % 31.1 31.0 29.3 28.9 28.5 Operating income, SEKm 1,675 1,373 2,787 2,281 1,581 Excl. items affecting comparability 1,675 1,373 2,787 2,281 2,348 Operating margin, % 13.7 12.4 12.0 11.0 4.8 Excl. items affecting comparability 13.7 12.4 12.0 11.0 7.2 Working capital, SEKm - - 6,716 6,276 5,066 Return on capital employed, % - - 9.6 10.5 7.6 Return on equity, % - - 9.2 11.6 6.7 Earnings per share after dilution, SEK 1.98 1.68 3.35 2.76 1.43 Capital turn-over rate, times - - 1.7 1.7 1.7 Operating cash flow, SEKm 2,220 2,282 -190 322 1,425 Net debt/equity ratio - - 0.63 0.61 0.60 Capital expenditure, SEKm 365 296 608 588 1,386 Average number of employees 15,295 16,128 14,693 15,714 14,337
  • 15. Summary, Q2 2015 • Continued trend of improved performance – Operating income up 22% to SEK 1,675m (1,373) – Operating margin improved 1.3 p.p. to 13.7% • High margin divisions growing net sales • Continued positive impact from Accelerated Improvement Program and changes in exchange rates - Product mix improvement driven by profit pool focus and material cost reductions • Further cost reductions in 2016-17 to release funds for investments in profitable growth activities and to mitigate unfavorable currency impact going forward 15