Q1 2018 results presentation

2018-04-24

Summary Q1 2018

2

• Profitable growth divisions continue their

improvement trajectory

– Higher earnings and margin in parallel to

continued growth investments

• Delayed start of the season due to the cold weather

in both Europe and North America

• Challenging year for Consumer Brands Division

• Group operating margin remains on a high level

Group results development

3

5,0%

5,5%

6,0%

6,5%

7,0%

7,5%

8,0%

8,5%

9,0%

9,5%

10,0%

1 000

1 500

2 000

2 500

3 000

3 500

4 000

Q3

201

3

Q4

201

3

Q1

201

4

Q2

201

4

Q3

201

4

Q4

201

4

Q1 2

015

Q2

201

5

Q3

201

5

Q4

201

5

Q1

201

6

Q2

201

6

Q3

201

6

Q4

201

6

Q1

201

7

Q2

201

7

Q3

201

7

Q4

201

7

Q1

201

8

Operating incomerolling 12 months

Operating marginrolling 12 months

SEKm

Excluding items affecting comparability

0%

2%

4%

6%

8%

10%

12%

17 Q1 17 Q2 17 Q3 17 Q4 18 Q1

Total for profitable growth divisions Husqvarna Gardena Construction

Profitable growth divisions - organic growth

4

Rolling 12 months

Financial highlights, Group Q1

• Decline in sales due to late start of gardening season and

scale-back of a major account in Consumer Brands

• Gross-margin improvement continue

• Positive FX offset by raw material price increases

• Operating income slightly below prior year

• Improved cash flow and reduced net debt

5

SEKm

Q1

2018

Q1

2017

Change,

% LTM1

FY

2017

Net sales 12,303 12,746 -3 38,951 39,394

Currency adjusted change, % -1 7 - - 7

Gross margin, % 28.8 27.6 - 29.5 29.1

Operating income 1,373 1,425 -4 3,738 3,790

Operating margin, % 11.2 11.2 - 9.6 9.65.51 Last twelve months.

Husqvarna Division Q1 2018

6

• Late spring delayed start of gardening season

• Some growth in Europe offset by decline in U.S

• Continued growth for robotic lawn mowers and other

battery-powered products

• Improved operating income and margin

• Favorable mix, positive FX

• Additional costs for profitable growth investments

SEKm

Q1

2018

Q1

2017

Change,

% LTM1

FY

2017

Net sales 6,049 6,136 -1 19,122 19,209

Currency adjusted change, % 0 11 - - 8

Operating income 1,070 1,032 4 2,765 2,727

Operating margin, % 17.7 16.8 - 14.5 14.21 Last tw elve months.

2017 restated to reflect transfer of certain retail sales from Husqvarna to Consumer Brands

Gardena Division Q1

7

• Seasonally small Q4 impacted by higher level of growth investments

• Strong full-year sales increase 9%

− Many new product launches as well as continued geography and

channel expansion

• Full-year operating income increased 19% to SEK 706m (595)

− Favorable sales volume impact and improved efficiency

• Continued roll-out of grow initiatives in new markets, new channels, and

an wide range of new products to be launched in 2018

SEKm

Q1

2018

Q1

2017

Change,

% LTM1

FY

2017

Net sales 2,059 1,715 20 5,974 5,630

Currency adjusted change, % 15 9 - - 9

Operating income 301 251 20 756 706

Operating margin, % 14.6 14.6 - 12.7 12.51 Last twelve months.

• Solid sell-in ahead of season

• Good growth across all product categories, new products

received well by market

• Continued geo-expansion/market penetration and fill-up of

online channel

• Additional profitable growth investments

Consumer Brands Division Q1

8

• Lower sales Scale-back of a major U.S. retail account in 2018

Late start of the season

• Operating income impacted by raw material price increases,

lower sales and manufacturing volumes

• Difficult to compensate for raw material by pricing during

season

• Footprint efficiency improvements continue

SEKm

Q1

2018

Q1

2017

Change,

% LTM1

FY

2016

Net sales 2,859 3,697 -23 8,695 9,533

Currency adjusted change, % -17 -4 - - -1

Operating income -63 68 n/a -183 -52

Operating margin, % -2.2 1.8 - -2.1 -0.5

1 Last tw elve months.

2017 restated to reflect transfer of certain retail sales from Husqvarna to Consumer Brands

Construction Division Q1

9

• 16% currency adjusted sales growth whereof 4% organic

• Positive development in Europe whereas North America was

impacted by delayed renovation project starts

• Good underlying momentum, particularly for dust & slurry

• Acquisition of Atlas Copco’s Light Compaction & Concrete

Equipment business included as of February 1

SEKm

Q1

2018

Q1

2017

Change,

% LTM1

FY

2017

Net sales 1,328 1,197 11 5,146 5,015

Currency adjusted change, % 16 18 - - 21

Operating income 158 141 12 666 649

Operating margin, % 11.9 11.8 - 12.9 12.9

1 Last tw elve months.

Consolidated income statement

10

SEKm

Q1

2018

Q1

2017

Full-year

2017

Net sales 12,303 12,746 39,394

Cost of goods sold -8,756 -9,234 -27,922

Gross income 3,547 3,512 11,472

Gross margin, % 28.8 27.6 29.1

Selling expenses -1,667 -1,600 -5,870

Administrative expenses -506 -489 -1,879

Other operating income/expense -1 2 67

Operating income1

1,373 1,425 3,790

Operating margin, % 11.2 11.2 9.6

Financial items, net -137 -138 -500

Income after financial items 1,236 1,287 3,290

Margin, % 10.0 10.1 8.4

Income tax -296 -299 -630

Income for the period 940 988 2,660

Earnings per share after dilution, SEK 1.64 1.72 4.62

1Of which depreciation, amortization and impairment -343 -327 -1,315

Consolidated balance sheet

11

SEKm

Mar. 31,

2018

Mar. 31,

2017

Dec. 31,

2017

Non-current assets 20,244 18,085 19,291

Inventories 10,302 9,252 9,522

Trade receivables 8,037 8,727 3,407

Other current assets 1,071 1,053 1,008

Liquid funds 2,606 2,233 2,190

Total assets 42,260 39,350 35,418

Total equity 16,980 15,403 15,667

Interest-bearing liabilities 10,472 10,297 8,039

Provisions for pensions 1,813 1,768 1,818

Other provisions 3,166 3,173 2,994

Trade payables 6,096 5,418 4,098

Other current liabilities 3,733 3,291 2,802

Total equity and liabilities 42,260 39,350 35,418

Operating working capital / net sales

12

27,1% 27,2%26,6% 26,6%

28,1%

26,8%

26,0%25,5%

27,5%

20%

22%

24%

26%

28%

30%

Target level<= 25%

Q1 16 Q3 17Q1 17 Q2 17 Q4 17 Q1 18Q4 16Q3 16Q2 16

Operating cash flow

13

SEKm

-3 000

-2 000

-1 000

0

1 000

2 000

3 000

Q1 Q2 Q3 Q4

2016

2017

2018

SEKm

Net debt / EBITDA

14

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

201

3 Q

1

201

3 Q

2

201

3 Q

3

201

3 Q

4

201

4 Q

1

201

4 Q

2

201

4 Q

3

201

4 Q

4

201

5 Q

1

201

5 Q

2

2015 Q

3

201

5 Q

4

201

6 Q

1

201

6 Q

2

201

6 Q

3

201

6 Q

4

201

7 Q

1

201

7 Q

2

201

7 Q

3

201

7 Q

4

201

8 Q

1

Average rolling 12 months net debt / rolling 12 months EBITDA

Times

Key data, Group

15

Q1

2018

Q1

2017

Full-year

2017

Net sales, SEKm 12,303 12,746 39,394

Net sales growth, % -3 12 9

Gross margin, % 28.8 27.6 29.1

Operating income, SEKm 1,373 1,425 3,790

Operating margin, % 11.2 11.2 9.6

Operating working capital, SEKm 12,243 12,561 8,831

Return on capital employed, % 13.9 14.2 14.7

Return on equity, % 16.5 16.3 17.4

Earnings per share after dilution, SEK 1.64 1.72 4.62

Capital turn-over rate, times 1.6 1.7 1.7

Operating cash flow, SEKm -1,326 -2,137 1,847

Net debt/equity ratio 0.54 0.64 0.46

Capital expenditure, SEKm 439 344 -1,892

Average number of employees 13,532 13,947 13,252

Summary Q1 2018

16

• Profitable growth divisions continue their

improvement trajectory

– Higher earnings and margin in parallel to

continued growth investments

• Delayed start of the season due to the cold weather

in both Europe and North America

• Challenging year for Consumer Brands Division

• Group operating margin remains on a high level

www.husqvarnagroup.com

17