Husqvarna AB (publ)

Hello everyone and welcome to the presentation of Husqvarna Group's report for the first quarter of 2025. My name is Johan Andersson, responsible for investor relations and will be the moderator here today. With me here in Stockholm, I have our CEO, Pavel Heyman, and our CFO, Terry Burke, that will present the report and afterwards we will open up for a Q&A session. You can ask your questions either over the telephone or you can enter them in the web interface and we will read them out here in the setting. So with that, thank you very much. And I will hand over to you, Pavel.

Thank you, Johan. And also, of course, a warm welcome from my side as well. You know what? I'd like to start, of course, with the press release that we issued in parallel with our report, where it is announced that I will be stepping down as CEO for the group here by the end of the year. It is so that I have the joy actually of turning 60 very soon in a couple of weeks. And I think that the long term perspective for the group is very important and also to have a long term view on the management. We are now in the end of the current strategy period, which has been due for five years. And we are in the works of actually developing a new strategy for the coming five year period, five year plus period. growth position however group net sales declined by one percent organically yes mainly related to the continuing challenge market conditions that we see now in north america for all three divisions and we also have a decline in the watering and in the construction segments The group operating income amounted to close to 1.6 billion Swedish crowns. This is some 400 million less than last year. And this decline compared with last year is really due to the currency effect, due to the price, and also due to the weak performance in North America. It was partly offset by good results from our cost-saving program of some 200 million plus. Direct operating cash flow improved with around 400 million in this first quarter, and this was driven by better cash flow from payables and from inventory reduction. Net debt was lowered with 4 billion versus the same period last year. And for robotics and battery, the share of group sales is now 21% on a 12-month rolling basis, and it's driven by a strong growth trajectory then, of course, in the robotics and specifically in the boundary wire-free robotics. where our Husqvarna Neera product line and also the professional products really have a leading position. What is also good and I'd like to highlight talking about the robotics is that in this quarter we saw that the boundary wire free Neera products actually amounted to more than 50% of our total robotics sales within the residential segment. And that is a good increase from the 30% that we saw in last year. in the sales of residential products. We also continue to expand in the professional robotics. We have delivered good progress there for our newly launched professional platforms, the mid-size, the 565-80 models, and we also see a very strong growth actually for the Husqvarna Seora model also. On a rolling 12-month basis, we are now at 7.5 billion in the robotics sales. So this good development that we've seen in the first quarter has now taken us back to growth, to the overall growth trajectory for robotics to be compared with last year where we were on 7.2 billion on the robotics side. So with that overall summary of the quarter, let me pass on to you, Terry, to go through more division-specific information.

Thank you, Pavel. Starting with our largest division, the Husqvarna Forest and Garden Division. Quarter one delivered a organic growth of 6% and an operating margin of some 13%. As Pavel already referred to, we had strong growth in robotic mowers. And what was good to see here was it was both in the residential segment and also in the professional segment. In addition to the sales growth for robotics, we also enjoyed good sales growth in handheld products. And what was particularly pleasing was a very solid sales growth of professional handheld within the division, which was very good to see. There has been a challenging situation and a significantly lower result in North America. In fact, the North America situation has impacted all three divisions, but clearly here within the forest and garden division, negative sales development and a lower operating income. There was also negative effects from some currency, approximately 100 million negative currency effect for the forest and garden division. We had lower price levels with the repositioning of our robotics and overall some negative impacts from the currency and the lower price. Last 12 months, organic sales was relatively flat and an operating margin of 7.5%. Gardiner Division. A challenging quarter for Gardiner Division. Organic sales declined 9% with an operating margin of 11.1%. There was growth in our robotic lawnmowers. We launched three boundary wire free models during the start of the year and that was well received and we delivered sales growth for the robotics. However, watering both in Europe and North America, sales decreased and that's really on the back of high inventory levels coming into the season and also cautious retail partners impacting the watering sales. There was negative volume and mixed impact in the profitability, which was partly offset by the cost savings. On a roll in 12, our sales have declined 9% and an operating margin of 5%. Moving over to construction. A challenging quarter for construction as well as Gardena with organic sales decline of 8% and an operating margin of 7.3%. There was sales growth in Europe, which seems to be a continuing trend that we are getting some positive development in Europe. However, likewise, the trend of a continuously negative sales development in North America more than offset that sales growth in Europe. So quite a significant weak North America sales. There was growth for dust extractors and a solid performance in our very important aftermarket business for construction. With the lower volumes and underutilization, that impacted our profitability. And again, that was partly offset by cost savings. Rolling 12, there is a sales decline organically of minus 7% and an operating margin of 7.6%. Looking at the Q1 EBIT bridge, we moved from a 13.1% margin last year, quarter one, to a 10.6% margin in quarter one this year. If I start from the left and work our way through, first of all, we have a negative 255 million. And that was really impacted by mix. And we talked a little bit earlier about the negative impact with watering and construction. It was also impacted by underutilization. And in addition to that, some logistics costs headwind. So that impacted our business by some 255 million. In the next column, you see a negative price development of 150. That was really driven by our price repositioning of robotic. And the price that we see here is really all about the robotic price repositioning. No other real categories were impacted negatively with price. There was a larger part of the negative 150 was driven by our boundary wire products where we have repositioned the price, but there was also a smaller price adjustment for our boundary wire free models as well to adjust to the market dynamics and environment. Cost savings, we delivered on track with 210 cost savings and our cost saving programmes continue to deliver in a very good way. We are on track with our cost saving programmes. Transformational initiatives have been reduced, let's say, 30 million in the quarter, but of course we remain quite cautious in this very difficult, uncertain environment. There is a 140 million currency headwind in the quarter one. There isn't really a tariff impact this quarter, but it's really driven by the currency. And that is due to the strengthening of the Swedish crown against the US dollar and the euro. This all landed with 1.561 billion of operating income. So. Moving on, we are actively working to improve our profitability through a number of actions. Of course, we know there are headwinds, we know there are pressures, and we are taking a lot of actions to improve our profitability. As you can see here, there are six areas that we have been focusing on. Our cost savings program, which I just talked about, we will continue to execute on our cost savings program. And we believe there is another 400 million of savings to come for the rest of this year as we continue to execute those programs. We will continue to offer a simplified product offering. We made some 10% reduction in our complexity. Let's call it a complexity reduction in our product offering. We simplified it some 10% last year, and our ambition is to continue that simplification with another 10% product offering reduction to simplify the range. We have continued to expand our sales offering in omnichannel. And if I use a particular example here, in forest and garden division, we are looking for opportunities for further expansion into retail. We are doing some pilot of some 60 stores in Europe retail this year, including Klaas Olsson, Hornback, uh leroy malin around the france etc region and there we expect to be able to offer our husqvarna division aspire range and really broaden in our omni channel We are always looking for efficiencies and consolidation in our production. I think Orangeburg divestment was a good example of that. And of course, we will always continue to drive efficiencies in that space. However, we will continue to invest in aftermarket and service. That is very important to us. And we will continue to invest in that highly profitable area. Price increases. We know there's a lot of uncertainty at the moment around tariffs. Maybe I can come on to the next slide and talk a little bit more about the actions to offset the headwinds that we see with tariff pressures. So, as we all know, we are living in a highly uncertain world at the moment, and we are continuously working to assess and improve our position within this difficult environment. Things move around quite regularly these days, but of course we are closely monitoring and measuring how we see the situation playing out with the tariffs. But as it stands at the moment, we do believe there will be an influence in consumer-customer demand. I think that's inevitable with the difficult situation. And also with the tariffs, there will be a direct impact to our financial results. Just to try to put it into some kind of context, approximately two-thirds of our sales in the US come from imported product, and that can be from China, Europe, Brazil, so it's really around the world. But around two-thirds of our sales in the US comes from imported products, so there is clearly an impact from tariffs there. Those product segments include professional handheld for both construction, power cutters, etc., and also for forest and garden division and professional chainsaws, handheld products, etc. It also impacts floor saws for the construction business and watering with our Gardena stroke orbit business in North America. We are implementing a number of price increases, supplier negotiations, reviewing our supply chain flows, et cetera, to understand how we can really mitigate the impact of the tariffs. And we have already started to implement some price increases. Others will follow later as we try to mitigate the pressure. And just to kind of wrap up and conclude from a tariff perspective, as I said, there is quite some headwind from the tariffs. We believe, again, it's a moving target, but as the current tariff situation stands, there would be a net exposure of some negative 300 to 500 million for the rest of 2025. That's the net amount. the tariff impact is higher but with all of the mitigating actions etc we believe the net impact is some negative three to five hundred million for the rest of the year balance sheet in summary i think we maintain and manage a solid balance sheet we have a solid financial position a couple of things to really highlight here uh inventory is reduced by four billion If you adjust for currency, it's actually a 3.2 billion inventory reduction year over year. So we feel pleased about that and we will continue to manage our inventory levels in a good way, especially during these uncertain times. we have performed well with our cash flow over the last couple of years and that has allowed us to also reduce our borrowings and as you can see here our borrowings have reduced by more than 2 billion so again a very positive development in our financial position we also completed the sale of the orangeberg production facility during q1 Net debt EBITDA remains at 2.5, which was the same as we ended 2024. Pavel mentioned it earlier. We managed to reduce our net debt by some 4 billion year over year to 13.7 billion, which we feel good about. We will continue to focus in this area and we're very mindful of the 2.5 net debt EBITDA. We've lowered our debt, but also at the same time, our EBITDA has reduced. So that is why we have ultimately ended up flat for the quarter. It's a roll in 12, by the way. Finally, on cash flow, cash flow remains very important to us. We have an improved cash flow situation, 400 million improved cash flow compared to last year, and partly driven by the sale of some inventory from the divestment of Orangeburg to Flex. As I said, cash flow will remain very important to us and we will monitor this and control this in a good way throughout the year. So with that, Pavel, I will pass back to you.