Husqvarna AB (publ)

Good morning, everyone, and welcome to the presentation of the first quarter results 2026 for Husqvarna Group. My name is Emily Alm, and I'm joined here today by our CEO, Glenn Instone, and our CFO, Terry Burke. So, Glenn and Terry will walk you through the presentation, and then we will have a Q&A session. So, as always, you can ask your questions through the conference call, or you can write them in the web interface online. So, with that, I would like to hand over to you, Glenn.

Thank you, Emily, and a warm welcome from my side. So let's jump straight into the presentation. Cue on to summarize. Off to a very solid start, despite, of course, the continued uncertain market sentiment that we see out there, particularly around geopolitical tensions. We've seen a strong growth in our core portfolio, our key strategic growth areas, and we're very pleased that our EBIT has expanded by some 10%, given the strong product mix, but also a very good start to our savings program. From a strategic execution perspective, we've got a very good 2026 ahead of us in terms of product launches, and Q1 has started very well when it comes to our product launches ahead of the season. We made a very good start around the strategic portfolio management that we launched back in December, and we'll come back to that later in the presentation. So all in all, 2% organic sales growth, EBIT expansion to just over 1.7 billion, and a 12.3% operating margin. So to highlight some of the strategic areas during the quarter. Innovation. We're very, very proud, and I'm really happy to really talk about our innovation that we're bringing to the market in Season 26. All three divisions are contributing here. Very happy to see the strong range of residential robotic lawnmowers that are coming for the small and mid-sized gardens, our 300 series range, really moving the needle towards boundary wire free AI vision technology. We also have an enhanced range of 400 series product under the NIRA brand, NIRA range, that also continue to expand and enhance our vision offering. Likewise, in the Gardena division, a strong range of watering products that really enhance the first quarter result, the simply classic range of nozzles and sprayers, as well as a strong range of watering controls. In construction, we've actually brought a good new range of floor saw blades to the market that really enhances our sawing and drilling business portfolio unit. That's just a flavour of what we brought during the first quarter. So a strong innovation pipeline already coming through in the first quarter. From a portfolio management perspective, and we launched this in December, we continue to enhance our operating model. This is where we will look much more strategically at our portfolio, grow in certain areas, and where we are not performing as well as we should be, we clearly need to turn it around or, in some cases, exit that portfolio. What I am pleased to see is we already see early signs of this coming through and we see that in the results. We've enhanced a lot of our leaders. We've changed some leaders during the first quarter of this year to really drive those business portfolio units. So the operating model starts to get traction. Operational excellence, I'm really pleased that we've got off to a good start when it comes to our savings program. We launched a four billion sec cost out program and we made a good start for some 245 million sec in the first quarter. Really coming through from some savings we found in sourcing and actually simplifying design. Really, really supported by a strong complexity reduction already during the first quarter. So all in all, off to a good start. If we look at the sales development, then as reported, our sales was minus 5. That is actually including a currency headwind of minus 7%. So organically, we grew with 2%. We've seen organic growth in the Husqvarna Forest and Garden Division with 3%, growth in the Construction Division with 1%, and a 1% organic sales decline in Gardena. As mentioned, very strong growth in our key portfolio areas, particularly around robotics, watering and handheld products. What I am pleased to say is that we've seen a growth in all of our regions so far in quarter one. So we're very pleased to see that it's been some time since we've reported a strong growth or a growth across all of the regions. Just to remind you what we launched back in December around the business portfolio units. We'll come back to this time and time again. We have clear segments that we're operating in what we call profitable growth. You see there, there is five key business portfolio units. Really pleased to actually say Four of the five have shown growth actually during the first quarter of 2026. In the middle of the page, we have three which we are in increased profitability, where we really expect to grow in line with the market. In the profitable growth segment, we expect we can grow actually beyond the market. On the left-hand side is the turnaround segments. We're actually seeing a continued challenge during the first quarter in all three of those areas. We'll come back and I'm very pleased actually with the plans we have in place around all of the areas, but particularly around the turnaround business portfolio units. And we'll come back to you in due course and report on them. From an earnings perspective, Terry will take us through the bridge later in the presentation, but as mentioned, we managed to expand operating income to just over 1.7 billion from 1.56 in the prior year, resulting in a 12.3% operating margin corresponding to 10.6% last year. And really, this is a volume increase, a price increase, an improved product mix, but also the result of strong, strong cost savings. We did, however, have a currency headwind as well as a tariff headwind. That culminated to some 115 million SEC. And again, Terry will take us through more of the details later in the presentation. Going into the divisional performance, if we look at Husqvarna Forest and Garden first, we saw a 3% organic sales growth. Growth in all regions, which we're very pleased to see, and growth in our key segments. Key segments of robotic lawnmowers and key segments of handhelds. Both residential robotic lawnmowers grew as well as the professional robotic lawnmowers. So very pleased to see. So from an earnings perspective, of course, we get an improvement from the volume, an improvement from the mix, but also, of course, a contribution from the cost out program. There was a slight positive tailwind from FX impacting the forest and garden division, which, of course, also improved the margin. From a Gardena perspective, the top line organically declined with 1%. However, I would say it is fairly polarised. By that I mean we saw a strong growth in the strategically important watering business portfolio unit and a continued decline in the powered garden area. So strong, strong growth in watering, as I said, and we're very pleased to see that. However, the challenge remains around the powered garden business portfolio unit and we'll continue to define and refine that turnaround plan and we'll come back in due course. But I'm very pleased with the plans that the team have in place to turn around this BPU. So despite the tough top line, actually the division managed to improve the earnings, which we're very pleased to see. So we actually saw a 10% expansion in the EBIT. Really driven by the strong product mix because of the watering growth and a continued strong development around the savings program. Lower impact from, or a negative impact from lower volumes, negative impact from tariffs, and also a slight negative impact from FX of some 13 million SECs. Moving over to Husqvarna Construction Division, we actually saw a growth of 1% organically. Actually, we saw a growth in the North America region and a softer European situation. However, strong growth when it comes to sawing and drilling, one of the profitable growth areas within the portfolio, and also growth when it comes to surface preparation, as well as a strong aftermarket development in the quarter. However, a continued negative when it comes to the compaction, placement and demolition part of the portfolio, again in the left-hand side of that previous page I showed you. Construction is actually more exposed to FX and we saw a negative headwind of some 43 million SEC because of the heavy presence in North America, but also actually a negative headwind by way of tariffs and raw materials. So despite that, those headwinds, we still managed 110 million SEC in operating income in the quarter for construction. So all in all, we're very pleased with the divisional performance.

At that, Terry, I pass over to you. Thank you, Glenn, and good morning from my side to everybody. If you want EBIT Bridge, 2% organic sales growth and a 10% EBIT growth, moving to a 12.3% margin. If I walk you through the bridge, starting from the left, going over to the right. We had a positive volume impact in the quarter. As we talked about, we had organic sales growth, and we also had favorable mix. The favorable mix was really coming from robotics growth, handheld growth, and watering growth. Those were the main drivers for the positive mix. However, this was partly offset by inflationary cost pressures. that we've incurred during the first quarter. Moving on to the next bucket, cost savings. We've delivered 245 million sec of cost savings during Q1, and we feel very pleased about that. We have guided roughly 800 million for the year. We still hold to that 800 million. We were able to take perhaps some of the lower hanging fruit early in the year, so that feels good that we're able to address that and we continue to drive our cost saving program. As Glenn mentioned earlier, cost savings predominantly coming through from sourcing and design to value. Moving on to price, we had a small positive price. This is a net price improvement in the quarter. We did have sale price decline in the robotics, and of course, the other categories had a positive price development, ending up with a small net positive in price. Transformational initiatives is something, of course, we want to continue to invest in. These are our strategic areas, and we invested some 50 million during quarter one. Currency, we had quite a significant currency headwind last year. This is now slowed down. We only have a negative 30 million in quarter one. So that was good to see that starting to play out. Just to give you some feel for how we see currency for the rest of the year, we expect another negative quarter in quarter two and then a slightly positive in the second half of the year. So for the full year, we expect a negative currency of some 60 to 100 million negative, depending, of course, how it plays out. Tariffs in quarter one was a gross negative 85 million. Our previous predictions, previous tariff rates, we talked about some 200 to 250 gross headwind for this year. We now see that being around a negative 150, so a slightly improved situation from the tariffs. So negative 85 and the rest of that 150 negative direction will come during Q2. So with that, we landed just above 1.7 billion of EBIT, 12.3% margin. Cash flow. Maybe the first thing to point out is we have changed the way we report cash flow just to make people aware that we, Now going forward, we'll talk about free operating cash flow. Previously, we reported on direct operating cash flow. What you can see in the quarter was a negative 1.1 billion. And really, this is impacted by timing. And the real movement was the change in net working capital. There's two elements to that. One is we currently stand with higher accounts receivable at the end of Q1. And that was really driven by a stronger sales development in the second half of Q1, which meant we ended the quarter with higher accounts receivable. The second one was we had lower trade payables. And I would say we are more normalized on our trade payables levels now. Last year was slightly inflated. So a more normalized situation there. But there are timing issues for both of them. And worth pointing out, quarter one is traditionally a negative cash flow quarter. Return on couple employed, one of our new financial targets and metrics that we launched in a couple of markets there in December. We've improved our return on capital employed to 7.6% from a 6.5% same time last year. So it's good to see how we've started to see an improved situation here. That's really driven by a couple of factors. First of all, we have an improved operating income. And secondly, we are seeing lower capital employed, which you can see on the chart in front of you. on average lower capital employed over the last 12 months. And that's really driven by we've lowered our borrowings. We've had a couple of good years of cash flow. We've been able to lower our borrowings, and that has had a positive effect. So good development on the return on capital employed. Balance sheet. We continue with a solid balance sheet and a good financial position. Maybe a couple of things to call out here. Inventory, we are some $900 million higher. If you were just for currency, it's actually just above $1 billion higher inventory. And we would say we are ready for the season to start. Quarter one is a selling season. Quarter two is really we talk about where the music plays and the sellout when the season starts. So we have good season readiness. We have good inventory around us. So we're ready to go for the season. Trade payables, I did already cover that in the cash flow part. But just again to highlight, we have higher trade receivables. It's a time and effect due to the stronger sales development in the second half of Q1. Borrowings, we've lowered by some $1.5 billion. compared to March 25, as you can see. And trade payables, as I mentioned earlier, some $1 billion lower. And that's really, again, a normalized situation this year compared to slightly above normal last year. Timing effects. So moving on to our debt position, our net debt EBITDA ratio is now at 2.0. compared to 2.5 this time last year. So again, we're driving this in the right way. We lower our borrowings. Our net debt position is 13.8, which is pretty flat to previous year, which was around 13.7 at that time. So a good progress on our net debt EBITDA. Our debt maturity profile, I would say, is healthy, as you can see in the bottom chart here. And we also successfully refinanced a new five-year bond of some 1.1 billion during February 2026. We remain investment grade, BBB minus, with a stable outlook. With that, Glenn, I'll pass it back to you.