Husqvarna AB (publ)

Hello everyone and welcome to the presentation of Husqvarna Group's report for the second 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 Hajman and our CFO Terry Burke. Pavel and Terry will present the report and then afterwards we will open up for a Q&A session. In the Q&A session, you can either use the telephone conference or you can enter your questions through the web interface. So with that, once again, welcome and I'll leave it over to you Pavel.

Thank you Johan and of course a warm welcome from my side as well. I need to press here. So let us start with the latest news as per our press release from yesterday evening. The board of directors has appointed Glenn Inston as the new CEO, effective August 11th. I'm very glad to hand over the baton to Glenn. He's a great leader with long experience in Husqvarna. I wish him of course all the best for the new role. And Glenn will of course then present himself on the upcoming quarter three report. I am also very glad and proud to announce that we close the second quarter, which is our biggest quarter for the year, on a positive note. We delivered a good organic growth for the group and improved EBIT as well as improved EBIT margin across all three divisions. And two areas of strong performance this quarter were robotic mowers and watering products. Our consistent focus on innovation, -to-market execution and delivering premium products under both Husqvarna and Gardena brands is clearly delivering strong results. Additionally, we continue to deliver on our cost saving measures. We focus on cash flow and we have further reduced our net debt. At the same time, we're making good progress on our sustainability agenda and have now reached two out of our three sustainable targets. Delivering on both fronts, financial and sustainability, reflects our commitment to sustainable value creation. However, we should bear in mind that the macroeconomic environment remains uncertain with ongoing trade tariffs, geopolitical instability, currency fluctuations and also a cautious behavior from both channel partners and consumers. And we continue to address these challenges through operational efficiencies, pricing strategies and also supply chain optimization. Unfortunately, we remain fully aware that these factors will continue to impact us and particularly in North America. So with that, let us also look a little bit at the financial details for the quarter. And if we start with group net sales for the quarter, we delivered a 5% organic growth, largely driven by the Husqvarna, Forest and Garden, Engardena, robotic, handheld and watering categories. However, as said, we continue to experience the uncertainty in the global economy and all three divisions have experienced difficult market conditions with lower sales in North America. Group operating income increased across all three divisions and grew by 7% to 2 billion 41 million for the group and the margin is up with one percentage point. And this development is driven by the higher sales volumes, also a favorable product mix and as well as a good results from our cost saving program. And the improvement is despite the negative currency, despite trade tariffs and also despite negative price effects. And we're actively working to deliver a good cash flow where inventory optimization is one of several key areas. An inventory was reduced by close to 3 billion SEK compared with last year as reported. And direct operating cash flow amounted to 2.4 billion in the second quarter and we also managed to reduce the net debt with 3.3 billion compared with the same period last year. As for robotics and battery, the share of group sales is now 22% up from 20% on a 12 month rolling basis. And this driven by our many new product launches within these areas. And we have seen a very strong growth in our pro robotic motor category, along with increased transition to the boundary wire free products for consumers. Regarding battery, both professional and residential battery product categories increased in the quarter. Particularly handheld product, but also our newly introduced wheel products. So with that overall summary of the quarter, let me then pass over to you, Terry, to go through some more specifics for our divisions, please.

Thank you, Pavel. Moving to the Husqvarna Forest and Garden Division. This was a strong quarter for the Forest and Garden Division with an organic sales growth of some 5% and an improved operating margin of 13.3%. We talked a little bit earlier about the good development of sales in robotic mowers. For the Forest and Garden Division, we had a 15% robotic mowers growth. So we feel very pleased about that. It was particularly strong in the pro segment. We also had good sales development in the handheld and battery powered products. Again, in the pro side was strong, but also growth in the residential. The challenging situation of North America continues. That has continued throughout the course of the first half of the year. And we expect that to continue going into the second half of the year as well. This has had a negative impact on our operating income. There is a negative currency effect of some 50 million in the quarter as well. And we have lowered prices, particularly in the robotic, with the price adjustment to reflect the very competitive landscape we face in robotic. First half year, we have a 5% organic sales growth and an operating margin of 13.1%. Also, maybe worth pointing out the currency effect for the first half year is some negative 155 million. Moving on to Gardena. Also a good strong quarter two for Gardena with organic sales growth of some 7%. And again, an improved operating margin at 17.5%. The growth was really driven by Europe. And in particular, we had strong watering growth. Good demand in the peak season of quarter two for watering. So that was really good to see. Some 15% watering sales growth in the quarter. We also had growth in our robotic lawnmowers, really driven by the launch of our three new boundary wire free models. Which have been well received into the market as well. Our EBIT operating income grew by 18%. Really helping through the volume growth, but also favourable mix. Watering is a margin accretive product category for us and we continue to live on cost savings. There was a small currency headwind of some 15 million negative in the quarter. First half year, sales have declined by 1% organically and we have an operating margin of some 14.5%. Currency headwind in quarter in the first half year is some minus 35 million. Construction. Construction was the the one division that did not have sales growth in the quarter with a sales decline of some 4% organic. However, it did improve their operating margin quite considerably to 12.7%. I would describe the market situation as quite stable in Europe and let's call it the rest of the world. But there is a continued weak market in North America with lower sales and lower operating income. There has been good growth in demolition robots, dust extractors and aftermarkets. Which allows us a more positive mix which is contributing to the margin. The margin improvement and in addition to that our operational efficiencies and our cost saving program is all contributing to that improved operating income and margin. There was a currency headwind. So despite this improved operating income, there was a currency headwind of some 60 million in the quarter. In the first half year sales have declined by 6% again really driven by North America. And an operating margin a slight improvement to 10%. Also to point out in the first half year currency had a negative impact of 80 million for the construction division. Moving on. To our EBIT bridge. Our quarter two EBIT margin improves by one percentage point and it improves to .4% compared to 12.4 quarter two last year. We have a positive volume and mix effect. We've talked about the 5% organic sales growth and in addition to that we have grown in favourable margin accretive categories such as robotic water and construction to a certain degree in the mix within construction. We have a negative price impact of some 160 million negative. That's the net effect. There's a lot of obviously price movement going on within but the big driver for the negative price development is the robotics price adjustment. Both in the forest and garden division and gardener division. We continue to deliver on our cost saving program some 225 million cost savings coming through in the quarter. So we feel very pleased about that. And we continue with some transfer emotional initiatives investments of some 40 million. There is a currency headwind that we talked about of some 125 million. And also we start to see the tariff impact now and the gross tariff impact in the quarter was some 65 million. Now that was more or less half offset by price and mitigating actions. So a negative 190 from currency and tariffs leaving us to our .4% margin just above 2 billion EBIT. So for the first half year we now have a margin operating margin of some 12% 12% and 3.6 billion of EBIT. Again moving from the left to the right. We now have a small positive effect for the volume and the mix of some 20 million. Price year to date is a negative 290 again predominantly driven by the robotics price adjustment. Our cost savings program is now above 400 million in the first half of the year as we continue to finalize and close out our cost reduction programs. Transformational initiatives of some 70 million we've continued to invest and then we have the currency effect for the first half year of some negative 265 and then we have the 65 of tariffs gross tariff impact. Okay with that I think we can move on to the balance sheet. We maintain a solid financial position and maybe just a couple of things to highlight here. As you can see our inventory levels continue to reduce. We come from a high level in 2024 and worked hard to reduce our inventory levels. 2.8 billion reduction compared to this time last year. If you adjust for currency effect it's around a 2 billion inventory reduction. We've got a good cash and cash equivalence that is improving as you can see here and we have reduced our borrowings by a billion year over year as well. Maybe also to call out trade payables has increased but that's really driven by the higher volumes. Moving on to net debt EBITDA. We have an improved ratio here and an improved situation with our net debt EBITDA. We have now reduced this from to 2.3 compared to 2.5 at the start of the year and we also have 2.5 at the end of Q1. So that's really good to see that development and that is really driven by our continued reduction of net debt. So it's good to see. Finally from my perspective good solid direct operating cash flow. We are at 1.1 billion for the first half of the year. I would say that's good performance. It's below the previous years but of course the previous years we were much more aggressive in reducing our inventory levels. We continue to reduce our inventory levels but at a lower rate than what we did in previous years. So I think there's a good situation with our cash flow as well and that continues to help us maintain a healthy balance sheet and continue to lower our net debt. With that Pavel I'll pass back to you.

Absolutely. Thank you Terry and I believe you're all aware of our four strategic focus areas for value creation and the underlying service business also that relates to this. And despite challenging times in the recent years we have continued to invest in R&D as well as go to market in these areas predominantly into the robotic area of course. And as said in the beginning we are now improving in these key areas for value creation but also on our commitment for sustainability. And let us take a closer look then at the key drivers robotics, battery, professional products and watering. And the clearest illustration of our strategy in action is really the progress that we have made towards our operational ambitions that we set out in 2021. Regarding robotics, battery solutions, professional products and the watering slash connectivity part. Now on robotic mowers you will note that we have now reached 7.8 billion Swedish crowns in sales on a rolling 12-month basis which is an improvement from the previous period. On the share of electrified products 46 percent of our motorized product sales are now electrified which also is an increase. And when we talk about professional sales 35 percent of our group revenues now goes to professional customers and finally also we have sold 5.5 million connected products. And these examples then illustrate how we are developing and transforming the group and they really also continue to drive our progress. Whilst there is still work to be done and we have not yet reached our ambitions in every area we remain fully committed and are moving steadily in the right direction. Let us take a look also on robotics and how that is driving us forward. Husqvarna Group is the world leader in robotic mowers. We have a business that is structured across three segments and the most recent and fastest growing is our professional segment. This is serving golf courses, sports arenas and other private and public spaces. And this season we launched four professional robotic mower models which already are driving a strong growth and also strengthening our market position in this segment. And our largest segment is the premium and mid-range category marketed under the Husqvarna brand and sold primarily through our servicing dealers. And we have also recently expanded our range of Husqvarna Nera models with around 80% of those being sold now as boundary wire free and achieving a double digit growth so far in this year in this segment. In the entry level segment marketed under the Gardena brand and representing less than 15% of our robotic business that is where we face the most intense competition. However we have reached a milestone also there with the launch of our first three boundary wire free models in this year and we have seen also growth here as well. And overall we are well positioned with a 14% -to-date growth and a strong pipeline of innovation also for the next season and the years to come. A few examples of progress also overall in the division is what I like to share here. If we start Forest and Garden division Husqvarna continues the partnership with Liverpool Football Club that we initiated last year and they are this year's Premier League champions and this collaboration really remains central for us to strengthen our global leadership in robotic lawn mowers. Recent brand tracking shows a strong double digit rise in global awareness for us and we aim to build on this momentum also for the next season. And please be aware Liverpool has around 186 million followers in social channels and even more that are following their matches. We're also now expanding our golf initiative through a multi-year partnership with the DP World Tour becoming a partner of the BMW International Open, the Amgen Irish Open and also the Bedford British Masters. And these events they are visited by thousands of people and they also get TV coverage and thus awareness is growing through that. And golf now actually accounts for one-third of the professional robotics business and we have over 300 golf courses that we added as new customers in this year only. Further for Husqvarna Forest and Garden we have launched a strategic pilot with tailored offerings at Klaus Olsson in Sweden, Hornbach and Hagerbau in Germany and also LeLay in France. And we've entered around 60 stores in key markets and we plan to reach 250 stores for next year. We've also expanded on digital marketplaces like Amazon, Mano Mano and strengthening our position in the suburban market which actually holds a significant untapped potential in both robotic lawn mowers as well as battery products. For Gardena I'm glad to say that the mainly 2024 retailers were very cautious with early orders but despite then sudden demand spikes that came here in this quarter we really scaled up our production and we could manage to deliver on time and achieving here a double-digit growth and record levels partly thanks to our new innovations like the Aqua Precise that you can see here on the picture. For construction the division remains steady across the season and this quarter we launched a new generation of professional dust management equipment and this advanced solution integrates with our existing portfolio and the other products there forming a complete system that effectively then tackles the airborne dust enhancing the safety on construction sites which of course is enormously important. As you know sustainability is a key part of our long-term business strategy and we are making solid progress also in this area towards achieving our Sustainovate 2025 agenda and this includes three core targets it's carbon, it's circular and people. And for carbon as of quarter two we have reduced our absolute co2 emissions across the value chain by 55 percent continuing our decarbonization journey here and this significantly exceeds our 2025 target of a 35 percent reduction and note that we saw a slight rebound then in emissions between Q1 and Q2 here due to changes in product mix. Circular during the quarter we introduced one new circular innovation bringing the total now to 41 and this was the K1 pace power cutter and the diamond blades where we have the weight reduced by approximately 20 percent while at the same time maintaining the expected lifetime of these blades and several additional candidates are now under evaluation then for the current quarter and the current half year and on the people side we further increase sales of our sustainable choices and the assortment therein products solutions with a proven lower impact on natural resources and the environment of course on that also and by the end of quarter two we had sold around 5.2 million sustainable choices also here achieving our 2025 target in this area. So in summary we closed our important second quarter on a positive note strong results on both the financial and sustainability fronts which reflect our commitment to sustainable value creation driven by incremental demand but also successful new product launches and importantly we continue to deliver on our cost saving measures we continue to focus on cash flow and we have further reduced our net depth. Now while macroeconomic conditions remain uncertain we are proactively addressing these challenges through disciplined cost management and really continued focus on innovation and sustainable solutions and finally again I'm very glad to hand over to Glenn the new CEO for the group from August and I wish him all the best in his new assignment. So with that Johan I leave it over to you and welcome your questions.

Thank you very much and thanks very much for the presentation Pavel and Terry so let us start with the question any questions from the telephone conference operator do we have any questions from the telephone conference at this point of time?

Yes we have a question from only one question from Hageus Gustaf from SEB. Thank you. Open the light.

Thank you operator. Thank you operator thanks for taking my questions this is Gustaf Hageus with SEB. If I start with the on the robotic side 40 percent growth in H1 is encouraging could you confirm whether or not the market grew faster from what you can see and you lost market shares in the quarter or in the half year maybe and then also to clarify given that you expanded somewhat into retail as you mentioned here was there a pipeline fill that impacted and was visible in that 14 percent growth that'd be interesting thanks.

Terry I know that you've had discussions on the on the topic of robotics also so please feel free to continue that.

So first of all the market has grown if you break it down into different segments I think is probably the right way to do it. We have had strong growth in the pro segment and we are basically the market leader and we grow with the market in that in that context. In the mid market segment the market has grown larger than ourselves we have double digit growth but the market did grow larger than us and then if you go into the entry segment we grew but the market did grow larger than us as well. It's a growing market it's a fast growing market and of course we maintain our market leadership position in a good way.

Maybe to add to the last part of your question there Gustav on the retail pilot that we have this is currently still marginal sales of course anything that comes from that part that channel through HFG is of course incremental but that's not yet what is moving the needle so to say.

Maybe one not from a pipeline fill either with the question?

No because also here I mean the retail partners have been cautious so to say initially in quarter one as you recall if you look at our result and sales growth from that part.

Maybe one more thing to add Pavel is of course we have had a negative price development particularly in the entry segment the competition have been extremely aggressive with their pricing and of course we have had to to match some of that to a certain degree. So whilst we show this 14% growth in the first half year if you were just for price reductions we've actually grown considerably more than the 14%.

And on the back of the price adjustments sort of in the lower end of the category range I'm thinking about the return on investments in continuing to develop a competitive offering in that end of the market. I noticed that as you mentioned you offer this Gardena free this year but it seems that competition is increasingly offering vision or lighter navigation so forth. Do you expect to need to continue to invest heavily in the lower end categories in spite of price headwind to stay on shelves and what at some point would you consider maybe exiting these lower categories to save your investments in other categories with higher returns?

I think it is so that we are active in the entry level as a premium brand. We are not competing in the lowest level of pricing spans which exist in that segment and where also of course the profitability is much lower. We ensure that we maintain the value of our brand both brands in retail I mean Gardena predominantly but also now Husqvarna to be perceived as a premium brand providing value to the customer over time with reliability in our product and a brand promise that stretches for many years. We are taking synergies of course across our overall product assortment and the development of that all the way from pro down to the entry level products and are so to say achieving synergies in that in terms of R&D costs and for the moment we have no intention of exiting the entry level segment. It is also important to remember that this is a complement to the Gardena watering range as it is part of a smart solution where a customer can operate both his robotics as well as his smart watering so to say through the same customer interface.

Okay and last question on robotics sorry for dwelling on this but it seems to me anyways that the dealers in Europe are increasing in multi-sourcing in robotics bringing in maybe Asian competitors to complement European ones in the mid-range segments. I guess my question is given that these Asian competitors seem to be on the hunt for sort of increasing the capability of their machines I guess next year they will serve larger areas sort of up to 15 000 square meters maybe. Is that increasingly something that you need to address that they're now getting a foothold in your dealer base and now maybe will launch more capable machines that are getting you a run for your money also in the higher range models and do you intend to sort of make a some type of leap in your offering in seo and so forth to to stand your ground there?

Well I think it is like this the competition will of course increase throughout all three segments over time we should be aware of that and and of course we are doing continuing our so to say focus on R&D innovation ensuring that we can really deliver good products to the customers. When it comes to the entrance of of so to say new competitors into our dealer chain we don't see that we know that other dealers who have been carrying other brands they take in Chinese competition but we do not see that in those dealers that are so to say our core dealership network they stay loyal and they have very high trust in our products and I think our sales growth in this year is also showing that but we see that in other parts of the of the overall dealer network some of those are taking in new entrants due to the fact that some of their original so to say suppliers are not necessarily keeping up with with competitive products.

Okay thank you those were my questions.

Thank you very much operator do we have any other one on the telephone conference?

Yes the next question comes from line of Fredrik Ivasson from Please go ahead.

Thank you good morning first coming back to sales growth plus five percent organic could you comment on the on the sellout performance maybe in general and maybe more particular on the on the

on sellout was specifically for robotics or general but in general we see an improved sellout in the European region versus the North American region I think this became clear from the presentation also that Terry did that overall we see a better performance in north sorry in Europe than what we see in North America and we have a very strong sellout of our boundary wire and we had a very strong market growth in the quarter on robotics in the US also despite the fact that there is of course a a so to say challenging customer demand in that region in general due to the ongoing economics there.

Maybe Pavel I can add to that just to set the scene a little bit with regards to North America in quarter two we had negative sales development in all three divisions for North America so North America has been weak for us. We've had positive development in Europe and partly offset by a weak environment in the US and Canada.

Thanks that's helpful and I think you mentioned a 50 percent share of boundary wire free robotics within residential in Q1. Do you have an update on that number?

Yes we do absolutely. Right now in value it's up to 75 percent actually so really the majority of our sales of residential robotics are the boundary wire free products.

Okay that's great thanks. Then I wonder if you have any view on the dealer inventory levels as of now and maybe whether we should expect more in-season sales in Q3 than usual.

The dealer's inventory situation is again a little bit different between Europe and US. If you start with Europe I'd like to say that from a general description we would say that it's quite a normal level at the time for the season so to say starting to go towards the end of the season. There are in some cases some pockets of lower inventory this could be relating in certain areas to robotics a little bit also to watering given that it's been quite hot for some long time now. Whilst if you go to the US we would say that also there the situation has normalized a little bit overall if I take across all three divisions but again in some pockets there could be some more inventory at shelf given the so to say reduced consumer demand that you see in the US here over some time now.

Thanks that's helpful and lastly a question on the US performance whether you've seen any elements of pre-buying due to the tariffs.

No not really I mean the situation to a certain degree so let's say stabilized first of all with the 90-day window tariff window that came earlier and then also with the well I don't know if I should call it an agreement or preliminary agreement with China that tariff stays on the additional 30 percent so we did not see any major pre-buys from that respect however of course we took the opportunity to ensure that we use that window of opportunity to ship in products and in general we continue to really work on all the mitigation actions that we can there around tariffs in terms of well price increases we have told you before that we launched those in May we are moving production of certain selected SKUs of high volume and we are really ensuring that our supply chain and distribution routes into the Canadian markets for anything produced outside of the US really goes directly to Canada because there is also a big impact on the tariffs between Canada and US which sometimes is forgotten in all of these discussions.

Maybe Pavel I can just add on the tariffs because we're touching upon the tariffs we do expect a further tariff pressure of a net impact of about 100 million negative in the second half of the year we've already had a negative net of around 40 million in quarter two and then another net 100 negative in the second half of the year we're doing a lot of mitigating actions as you say Pavel with supply chain but price increases but that's the net negative impact of tariff and

maybe then to build further on that to clarify the picture completely this is based basically on remaining with 30 percent tariffs on China and 10 percent on Europe. Could the European situation change then we have an additional negative effect that comes on top of that what you just said there.

Yeah good point.

Great thank you that's all my questions.

Thank you very much Fredrik and then we had a couple questions here from that has been mailed in I think the first one is a clarification to you Terry for the construction division what factors contributed to the decrease of four percent what regions grow or were stable and what what decline. Sorry in the sales. Yeah it

was it was pretty clear the situation of construction sales development. North America was weak as I had previously highlighted again it was weak for all three divisions but for sure construction North America was weak sales partly offset by a stable small growth in Europe rest of the world.

Good thank you very much. I think we had another one from from Fredrik's colleague at ABG from Karl-Oskar Bredengren. He wonders about the robotic production now you're producing in Europe but you're growing the business in North America the robotics business in North America. At what point on time does it make sense to start to produce locally in North America on the robotic side.

Yes well we're very happy of course that we are growing now the business in US of robotics predominantly it is really the professional robotics that is growing and we think that this will give a good halo effect also over to the consumers and we've actually seen a couple of examples of that also through being so to say present on on on golf courses. You know the volume needs to come up quite significantly before we would consider a manufacturing in the US. At the current situation with tariffs we are producing our robotics in Europe and that is of course beneficial versus producing them in China. But we are aware of the fact that when volumes will go up there will be so to say a breaking point when that will be actual but I don't think it is suitable to discuss that kind of so to say tentative or potential timing at this point of time.

Okay thank you very much. Operator do we have any further questions on the telephone conference?

No questions on the telephone conference at the moment.

All right then we had a final question here from Stefan Stjernholm at Handelsbanken. You achieved very good growth for a momentum in robotics in age one. What about the profitability if you compare it to last year? Are you satisfied with the levels? Are they up and how do you how do you see it?

The profitability specific to robotics robotics

in age one

yeah yeah and and i think we've been quite transparent in our profitability. We are margin accretive from a robotics perspective when we go to the the more mid premium and professional side. It is margin decrease accretive when you start to get into the entry segment. It's a very tough competition out there very price aggressive and that's not so favorable from a profitability perspective.

Thank you very much. We got just got another question here on our pro robotics business. Given our strong growth there in pro robotics and our our market leadership position do we see any further expansion of use cases? Are we broadening the scope more? You have focused a lot on golf and certain areas. Do you see further scope here when when we are to build on this momentum?

Well yes absolutely we do. I mean if you start with being within the existing scope but still some areas of application we were not present is for example ball picking around the golf as one example for the future also to be able to do green mowing autonomously bunker raking autonomously. There are of course opportunities there. When you go over more to the so to say community space one area which of course is of interest and that I think will be a future so to say potential is trash picking in public areas parks around various sport fields and and stuff like that. Here actually we have a minority stake at a german startup which actually is exploring those opportunities and already have several so to say pilots ongoing with german cities actually testing their solution which is actually working quite well. So of course there are further opportunities yes.

Good many thanks. Operator have you got any final questions on the telephone conference or are we done with the queue?

We're done with the queue no questions on the phone.

Okay and we have not any further questions mailed in here so I think with that we will thank everyone for dialing in and joining over the web and we then will report queue three in October and then we will have a capital markets day in queue four as well. So thank you very much for listening in and have a great day.

Thank you.