Husqvarna last week reported that net sales for the first quarter declined by 19 percent to SEK 9.1 billion (about U.S. $1.3 billion) from 11.2 billion (U.S. $1.5 billion) in the first quarter of 2009. Adjusted for currency exchange-rate effects, sales declined by 9 percent. Prices were unchanged. Americas accounted for 7 percentage points of the adjusted decline, Europe & Asia Pacific for 2 percentage points and Construction was flat. Dealer sales increased.
“The year had a slow start due to an unusually long and cold winter in several markets,” said Magnus Yngen, president and CEO. “The weather affected the sell-in for the garden season and activities in the construction market. However, sales picked up and increased considerably towards the end of the quarter.”
Operating income for the first quarter decreased by 1 percent compared to the corresponding quarter 2009 and amounted to SEK 778 million (U.S. $107.1 million) from SEK 786 million (U.S. $108.2 million) a year ago. Currency had a positive effect of approximately 11 percent and the net effect from items affecting comparability was negative 2 percent. Adjusted operating income declined by 10 percent.
Operating income includes a charge of SEK 50 million (U.S. $6.9 million) for settlement of an engine-capacity lawsuit in the United States. The first quarter of 2009 included restructuring charges of SEK 35 million (U.S. $4.8 million) related to personnel cut-backs. The decline in operating income was mainly due to lower sales. Operating income and operating margin for Europe & Asia/Pacific and Construction increased, but decreased for Americas.
Income for the period increased by 15 percent to SEK 535 million (U.S. $73.6 million) from SEK 464 million (U.S. $63.9 million) a year ago, corresponding to SEK 0.92 (U.S. $0.12) from SEK 0.98 in 1Q09 (U.S. $0.13) per share after dilution. Because of the rights issue in 2009, the average number of shares has increased compared with Q1 2009.
In light of the late start to the season and the expectation of a better sell-out, Husqvarna estimated thatsales in the second quarter will be in line with the second quarter of 2009 despite reduced listings in North America.
“The introduction of our new global organization is one of the most important steps for improving internal efficiency in the group,” said Yngen. “The organization is now in place and several initiatives relating to supply chain, products and marketing and sales are in progress. The initiatives are already paying off, improving efficiency and reducing costs.”
Headquartered in Stockholm, Sweden, Husqvarna produces lawn mowers, chainsaws and portable petrol-powered garden equipment such as trimmers and blowers. The group is also a leader in diamond tools and cutting equipment for the construction and stone industries.