Husqvarna Group Q1 2015 results presentation

1. Q1 2015 results presentation
2015-04-21

2. Summary, Q1 2015
• New brand-driven divisional organization working well
• Strong first quarter; operating income up 22%
– Total sales declined, however a favorable
divisional sales mix
– Slow start due to cold weather conditions in U.S.
– Short term positive currency impact
• Accelerated Improvement Program continues to
deliver improving margins
• Additional improvement areas identified to balance
unfavorable currency trend to reach margin target
of 10% 2016
2

3. Financial highlights Q1 2015, Group
• Sales declined -3% (currency adjusted)
– Higher in all divisions, except for Consumer Brands
• Gross and EBIT margin improvement trend remains
• EBIT rose by 22% to SEK 1,112m (908)
– Divisional mix positive
– AIP delivers continued improvements
– Short term positive currency impact
– Negative sales volume impact and higher SG&A
3
SEKm
Q1
2015
Q1
2014
As
reported Adjusted1
LTM2
FY
2014
Net sales 10,928 9,685 13 -3 34,081 32,838
Gross margin 27.2 26.4 - - 28.7 28.5
EBIT 1,112 908 22 7 1,785 1,581
Excl. impairment 1,112 908 22 7 2,552 2,348
EBIT margin, % 10.2 9.4 - - 5.2 4.8
Excl. impairment, % 10.2 9.4 - - 7.5 7.2
1
Adjusted for currency translation effects. 2
Last tw elve months rolling
% change, Q1

4. Husqvarna Division Q1 2015
• Sales increased 9% (currency adjusted)
– Europe: profit pool areas show good growth and earlier
sell-in of wheeled products
– North America dealer sales positive despite late spring
• EBIT rose by 35% to SEK 897m (667) and margin improved
– Favorable sales volume impact
– Increased productivity
– Short-term favorable currency impact
– Higher SG&A
4
SEKm
Q1
2015
Q1
2014
As
reported Adjusted1
LTM2
FY
2014
Net sales 5,342 4,358 23 9 16,433 15,449
EBIT 897 667 35 23 2,238 2,008
EBIT margin, % 16.8 15.3 - - 13.6 13.0
1
Adjusted for currency translation effects. 2
Last tw elve months rolling
% change, Q1

5. Gardena Division Q1 2015
5
SEKm
Q1
2015
Q1
2014
As
reported Adjusted1
LTM2
FY
2014
Net sales 1,319 1,152 15 9 4,379 4,212
EBIT 204 177 15 6 410 383
EBIT margin, % 15.5 15.4 - - 9.4 9.1
1
Adjusted for currency translation effects. 2
Last tw elve months rolling
% change, Q1
• Sales increased 9% (currency adjusted)
– Good sell-in of watering products and robotic mowers
– New customers
• EBIT rose by 15% to SEK 204m (177)
– Positive sales volume impact
– Favorable product mix
– Higher R&D costs

6. Consumer Brands Division Q1 2015
6
SEKm
Q1
2015
Q1
2014
As
reported Adjusted1
LTM2
FY
2014
Net sales 3,343 3,393 -1 -21 9,788 9,838
EBIT -11 44 n/a n/a -210 -155
EBIT margin, % -0.3 1.3 - - -2.1 -1.6
1
Adjusted for currency translation effects. 2
Last tw elve months rolling
% change, Q1
• Sales declined -21% (currency adjusted)
– Cautious retail buying behavior in North America due to cold weather
– Higher sales in Europe
– Generally, value prioritized before volume
• EBIT decreased to SEK -11m (44)
– Lower absorption of fixed costs due to lower volume
– AIP Operational Excellence deliver continued material cost reductions
and productivity enhancements
– Negative currency impact

7. Construction Division Q1 2015
7
SEKm
Q1
2015
Q1
2014
As
reported Adjusted1
LTM2
FY
2014
Net sales 924 782 18 2 3,481 3,339
EBIT 74 81 -9 -21 347 354
EBIT margin, % 8.0 10.4 - - 10.0 10.6
1
Adjusted for currency translation effects. 2
Last tw elve months rolling
% change, Q1
• Sales increased 2% (currency adjusted)
– Supply issues in North America due to west coast harbor strike
– Higher sales in Europe, despite a slow start
– Customer inventory reductions in Brazil
• Higher run-rate of sales growth in March
• EBIT decreased to SEK 74m (81)
– Higher cost due to investments in sales capacity and
product development as well as some one-off costs
– Favorable currency impact

8. Consolidated income statement
8
SEKm
Q1
2015
Q1
2014
FY
2014
Net sales 10,928 9,685 32,838
Cost of goods sold -7,952 -7,128 -23,488
Gross income 2,976 2,557 9,350
Gross margin, % 27.2 26.4 28.5
Selling expense -1,467 -1,324 -5,626
Administrative expense -397 -325 -1,392
Other operating income/expense 0 0 16
Impairment of goodwill - - -767
Operating income1 1,112 908 1,581
Operating margin, % 10.2 9.4 4.8
Financial items, net -55 -96 -325
Income after financial items 1,057 812 1,256
Margin, % 9.7 8.4 3.8
Income tax -269 -192 -432
Income for the period 788 620 824
Basic earnings per share, SEK 1.37 1.08 1.43
Diluted earnings per share, SEK 1.37 1.08 1.43
1
Of which depreciation, amortization
and impairment
-261 -231 -1,734

9. Gross margin development
9
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%
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
LTMQuarter
Gross profit margin, % Q
Gross profit margin, % LTM

10. Consolidated balance sheet
10
SEKm
31 Mar
2015
31 Mar
2014
31 Dec
2014
Non-current assets 16,299 14,640 15,748
Inventories 9,338 7,277 7,709
Trade receivables 7,805 7,180 2,898
Other current assets 655 630 716
Liquid funds 2,241 1,755 2,105
Total assets 36,338 31,482 29,176
Total equity 12,933 11,923 12,088
Interest-bearing liabilities 10,479 9,096 7,504
Pension liabilities 1,934 1,357 1,835
Provisions 2,693 2,328 2,550
Trade payables 5,632 4,514 3,154
Other current liabilities 2,667 2,264 2,045
Total equity and liabilities 36,338 31,482 29,176

11. Operating cash flow
11
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
Q1 Q2 Q3 Q4
SEKm
2015
2014
2013

12. 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
Net Debt / EquitySEKm
Net debt
Equity
Net debt / equity
Net debt and equity
12

13. Key figures
13
Q1
2015
Q1
2014
Full-year
2014
Net sales, SEKm 10,928 9,685 32,838
Gross margin, % 27.2 26.4 28.5
Operating income, SEKm 1,112 908 1,581
Excl. items affecting comparability 1,112 908 2,348
Operating margin, % 10.2 9.4 4.8
Excl. items affecting comparability 10.2 9.4 7.2
Working capital, SEKm 8,308 7,209 5,066
Return on capital employed, % 8.5 8.6 7.6
Return on equity, % 7.9 9.1 6.7
Earnings per share, SEK 1.37 1.08 1.43
Capital turn-over rate, times 1.7 1.6 1.7
Operating cash flow, SEKm -2,410 -1,960 868
Net debt/equity ratio 0.79 0.73 0.60
Capital expenditure, SEKm 243 292 1,386
Average number of employees 14,436 15,750 14,337

14. Further actions planned to reach
10% operating margin target in 2016
• Solid recovery of operating income and margin since
launch of Accelerated Improvement Program
• Recent current currency exchange rate development
will have negative impact on margins
– Flat for rest of 2015 but negative 2016 vs. 2015
• Additional actions needed to reach 10% margin.
Potential improvement areas include
– Group-wide: indirect material spend and logistics costs
– Divisional reviews: Capacity adjustments and efficiency
enhancements
14

15. Summary, Q1 2015
• New brand-driven divisional organization working well
• Strong first quarter; operating income up 22%
• Accelerated Improvement Program continues to
deliver improving margins
• Recent currency exchange rate development
will have negative impact on margins
• Additional improvement areas identified to reach 10%
margin target 2016
• Stable demand expected for Q2
15

16. www.husqvarnagroup.com
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