Husqvarna AB (publ)

Good morning everyone and welcome to the presentation of the second quarter results of 2026 for Husqvarna Group. My name is Emily Alm and I am Head of Investor Relations. I'm joined here today by our CEO Glenn Inston and also our CFO Terry Burke. So Terry and Glenn will go through the presentation and we will then have a Q&A session. So with that, I would like to hand over to you.

Thank you, Emily. Good morning, all, and a warm welcome from my side. And welcome to our Q2 report. So let's jump straight in. So following a very strong start to the year with a strong sell-in to our trade partners and very successful product launches, Q2 has been somewhat difficult. That's been really geopolitical uncertainties and a weaker consumer sentiment has certainly weighed on consumer demand. And we also had a somewhat unfavorable weather conditions really impacting the first half of the quarter, the first six weeks of the quarter. And that certainly had an impact particularly in Europe. Despite that, we managed to see a good growth in North America, and that is a good build on where we were actually after the first quarter. So we're very pleased with the continued growth in North America. Of course, the lower volumes overall and higher cost inflation is impacting our margins. However, very, very pleased to see our cash flow develop strongly into the second quarter, and we'll come back in more detail on that later in the presentation. From a real strategic execution perspective, I'm actually very pleased with where we're heading. We've managed to actually achieve and implement strong savings, and we've triggered some strong savings programs. And we've also accelerated our strategic portfolio work in terms of making some firm decisions during the second quarter. And again, I'll come back to them in more detail as we go through the presentation. So all in all, second quarter, our activities have been very, very good. What I'm very pleased to see is actually we've managed to finalize our recruitments of four new group management members. All will join us during the remainder of the year. Actually, Anders, Lilly and Patrick will come in during Q3. And Anders Kandel will join us during the fourth quarter. The one addition to the group management team is actually the CPO, the Chief Procurement Officer with Lilly. That is a new position we've created. Because we really feel sourcing and procurement is a strategic value creation lever for this group. It's where we feel we can add more value and it is much more than just a cost area. So having this really put together under one leader at the executive table who's really going to drive our strategic sourcing agenda as well as a common agenda around supplier strategy. Thank you very much. So, just to look at some of those strategic highlights that I mentioned on the first page that I'm really happy with during the second quarter, I'll give some examples. These are just a few examples. Within the area of logistics, we started to look at this much more holistically as a group. We've actually managed in the logistics network to reduce the number of suppliers by two-thirds. That is quite a big number. Thank you very much. We've also managed to do some good warehouse consolidations already during the second quarter and this will continue now going forward in the remainder of the year and into 2027. So reducing the number of warehouses we have and therefore also over time reducing the inventory as well that we have. Again, driving savings, lower inventory but also benefiting from the better service level agreements from the logistics providers. In the manufacturing footprint area, an example we can also bring is what we've been doing in the Gardena division. We've been very much looking strategically at manufacturing in terms of where the core skill set sits, and we're going to move some operations from Germany into Czech Republic. And the main rationale there is where we have high volume, highly automated processes, they will stay in Germany. Where we have more labor intensive, more manual processes, they will be moved into the Czech Republic. Again, very strategically set strategic manufacturing footprint. This will, in essence, impact the hand tools and watering business portfolio units within the Gardena division. As part of the strategy, we talked a lot about strategic portfolio management. And by that means we're going to address our underperforming parts of the portfolio to spend more time on the high performing business portfolio units. And some of the measures we've taken during the second quarter. One is our intention to discontinue our stone diamond tool business in the construction division. This will be done during the remainder of 2027 and have an impact on sales of some 250 million SEC, but the EBIT margin accretive both to the construction division as well as the total group. Today, we also announced that we will move from a turnaround case to a strategic review of our powered garden business portfolio unit within the Gardena division. This continues to be pressured as a segment, and therefore we're going to really move this into a more formal strategic review. And we will come back to you with the results of that and our firm decision during the first couple of months of 2027. So very, very pleased with what we're doing and the decisions we've made during the second quarter. From a total cost out perspective, we're actually ahead of plan. We previously indicated a cost savings program of some 4 billion SEK effective by 2030. And given the second quarter, we've actually managed to add some 385 million SEK in savings on the back of a 245 million SEK benefit in Q1. So 630 million SEK run rate savings already effective now. This actually gives us the confidence that we need to increase the timing effect of our savings. So as such, we now target achieving some 3 billion SEC effective by the end of 2028. We remain with the 4 billion SEC, but want to really increase the benefit and the timing of that benefit. So 3 billion SEC in the timeframe 2028. And the reason we're also doing this, of course, headwinds continue to come. The Middle East crisis does impact raw materials and logistics, and we need to continue with our savings initiative to make sure we more than offset those headwinds that we see going forward. I'm extremely proud and pleased to announce that our science-based targets have been validated during the second quarter as well. Our targets of reducing our carbon emissions by 60% versus the 2015 baseline have been validated during the second quarter. This is a further support to what we're doing. And we're very happy that the science-based targets have been validated in this way. And we'll continue driving this by way of electrification as the portfolio electrifies, really driving further carbon reductions through our total supply chain and our operational excellence programs, and also really looking at how we engage with our supply chain partners to make sure they're also reducing their carbon emissions and really walking the talk in terms of our commitments when it comes to our carbon reductions. over to the P&L, and we'll start with sales. Sales in the second quarter organically declined by 4%. I just want to put that in context. We had a strong sell-in in Q1 with a positive 3%. We also had a very strong quarter 2 in 2025, actually had a positive 5% sales. So 4% decline, given the macro uncertainty and given the weak consumer sentiment, is actually reasonable, especially looking at that in conjunction with the prior year and the strong sell-in in Q1. We saw a decline in the forest and garden division of some 3%, a decline in garden of 11%, but a growth in the construction division of 5%. As mentioned on the opening slide, we certainly saw, let me say, more of an impact in Europe. We consume a sentiment globally, but the weather impact in Europe certainly weighed on demand in terms of that replenishment cycle that we normally see, particularly early in Q2, which are our main selling months. However, very pleased with the performance in North America, a continued increase And actually, that improvement was across the board, all three divisions growing in the second quarter and across most of our product categories. So very, very pleased that North America takes a further step forward.

If we look at that from an earnings perspective...