Earnings Call: Husqvarna Group Sees Growth in Robotics Despite Market Challenges

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Earnings Call: Husqvarna Group Sees Growth in Robotics Despite Market Challenges

In the 2024 Third Quarter Earnings Call, Husqvarna Group (HUSQ-B.ST) CEO Pavel Hajman reported mixed results, particularly amidst broader market declines in North America and cautious consumer spending, despite growth in robotic and battery-operated products. Organic sales decreased by 4%, while the company highlighted a strong financial position with significant cash flow, substantial inventory reduction, and decreased net debt. Husqvarna also announced plans for new cost-saving measures and strategic investments in growth areas such as robotics and artificial intelligence.

Key Points:

  • Organic sales decreased by 4%, with operating income declining from 415 million SEK to 53 million SEK year-on-year.
  • The company achieved 190 million SEK in cost savings during the quarter, bringing the total to 590 million SEK year-to-date.
  • Cash flow remained strong at 4 billion SEK, inventory levels were reduced by 3.7 billion SEK, and net debt was lowered by 2.8 billion SEK.
  • The robotic and battery segments now represent 20% of Group sales, with professional robotics experiencing double-digit growth.
  • The company plans to launch 13 new boundary wireless robotic models and has exceeded its 2025 target by reducing CO2 emissions by 56%.
  • A new cost-saving initiative aims to cut fixed costs by 500 million SEK, impacting approximately 400 positions.

Company Outlook:

  • Husqvarna is launching 13 boundary wireless robotic models for the upcoming gardening season.
  • The company remains cautious about the challenging market environment while committed to innovation and growth in strategic areas.

Negative Highlights:

  • The U.S. market experienced a significant decline in sales of wheeled gasoline products.
  • Sales of margin-enhancing products, including irrigation and professional segments, dropped throughout the quarter.

Positive Highlights:

  • Professional robotics sales reached 1 billion SEK, driven by strong demand in the sports and golf sectors.
  • The relationship with Home Depot for Gardena products is progressing favorably.

Shortcomings:

  • Non-recurrence items included a 150 million SEK gain and inventory impairment that affected gross margins.
  • The transition from gasoline lawnmowers to robotics is still in early stages, particularly in the U.S.

Q&A Highlights:

  • CEO Pavel Hajman and Terry Burke provided insights on financial metrics, sales performance, and the impact of cost-saving measures.
  • The net debt/EBITDA ratio stands at 2.4, with a strong focus on cash flow and further debt reduction.
  • In the fourth quarter, a one-time cost related to cash outflows largely due to position reductions is expected to be 600 million SEK.

The earnings call of Husqvarna Group showcased a company advancing through a complex market environment with a focus on strategic initiatives and innovation. Despite current challenges, the company positions itself for future growth, particularly in the robotics segment, while maintaining strong financial discipline. The next earnings report is scheduled for February 5, 2025, which will provide further updates on company performance and outlook.