Husqvarna this week reported a 1-percent drop in second-quarter 2011 net sales to SEK 10.18 billion (about U.S. $1.55 billion) from SEK 11.46 in 2Q10 (U.S. $1.74 billion) and operating income to SEK 1.01 billion (U.S. $154.1 million), a 23-percent drop from SEK 1.32 billion a year ago. Income for the period amounted to SEK 681 million (U.S. $103.7 million) from SEK 936 million, or SEK 1.18 (U.S. $0.18) per share from SEK 1.62 per share a year ago.
For the second quarter, reported sales for the group decreased 11 percent, but adjusted for exchange rates the decrease was one percent.For the first half-year sales adjusted for exchange rates increased by two percent. Industry demand decreased in North America and together with the supply chain challenges in the Orangeburg, S.C., factory sales were affected negatively.
“The production disturbances continued to hamper the output from Orangeburg as well as resulting in higher costs,” said Hans Linnarson, acting CEO and president. “As a result of measures taken, the going cost rate directly related to the disturbances gradually decreased. In the first quarter, the costs were approximately SEK 150 million (U.S. $22.8 million), whereof the majority in March. The total amount for the second quarter was SEK 180 million (U.S. $27.4 million).
“Our highest priority going forward is to secure deliveries to our customers for the 2012 season in a timely manner. Further measures will be taken within the Orangeburg factory, which is expected to result in SEK 100 to 150 million higher costs during the remainder of 2011. We are also planning to increase our pre-season production.”
The company reported that the European market started strongly but slowed down towards the end of the second quarter. Adjusted sales for Europe & Asia/Pacific increased four percent for the second quarter, which was in line with the total market. For Construction, the positive development continued and market shares increased.
“The group’s operating income declined in the second quarter,” said Linnarson. “Higher selling prices and a favorable mix were not able to offset negative currency effects, costs related to the production disturbances, higher input costs and marketing expenses.”
Husqvarna cited production capacity and flexibility to guarantee the highest delivery performance as its priority and said it will also review the pace of its ongoing restructuring projects. As a result, savings from manufacturing footprint restructuring will be delayed.
The Husqvarna group is the world’s largest producer of outdoor power products, including chainsaws, trimmers, lawn mowers and garden tractors.