This article first appeared on GuruFocus .
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Organic Sales Decline:4% decline in Q2.
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Forest & Garden Division Sales:3% decline.
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Gardena Division Sales:11% decline.
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Construction Division Sales:5% growth.
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Q2 Earnings:SEK1.95 billion.
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Operating Margin:13.6% in Q2, up from 13.4% last year.
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Tariff Refund:SEK240 million received, impacting COGS.
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Cost Savings:SEK385 million in Q2, SEK630 million year-to-date.
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Free Operating Cash Flow:SEK3.9 billion in Q2.
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Net Debt:Reduced to SEK11.8 billion from SEK12.3 billion last year.
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Net Debt-to-EBITDA Ratio:Improved to 2.0 from 2.3 last year.
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Return on Capital Employed (ROCE):7.4%, up from 7% last year.
Release Date: July 17, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Husqvarna AB ( HSQVY ) achieved strong growth in North America, with all three divisions showing improvement in the second quarter.
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The company successfully implemented cost savings programs, achieving SEK385 million in savings during Q2, contributing to a total of SEK630 million year-to-date.
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Husqvarna AB ( HSQVY ) finalized the recruitment of four new group management members, including a new Chief Procurement Officer, to drive strategic sourcing and supplier strategy.
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The Construction Division experienced a positive 5% sales growth, with strong performance in the sawing and drilling business portfolio unit and record aftermarket sales.
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The company's science-based targets for reducing carbon emissions by 60% have been validated, supporting its commitment to sustainability and carbon reduction efforts.
Negative Points
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Husqvarna AB ( HSQVY ) faced a 4% organic decline in sales during the second quarter, impacted by geopolitical uncertainties and weaker consumer sentiment.
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The Gardena Division saw an 11% decline in sales, attributed to weaker consumer sentiment and unfavorable weather conditions affecting replenishment cycles.
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The company experienced significant inflationary pressures from raw materials and logistics, exacerbated by the Middle East crisis, impacting costs.
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There was a negative impact on gross margins due to lower volumes, unfavorable geographical and product mix, and currency headwinds.
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Inventory levels were higher than desired, particularly in Germany and the US, due to weaker sales demand during Q2.
Q & A Highlights
Q: When stripping out the tariff refund from COGS, it seems like the gross margin is down 3 percentage points. Can you provide more granularity on the different components affecting this? A: Terry Burke, CFO, explained that the significant negative impact was due to volume mix and inflationary pressures, affecting COGS and the margin. Approximately half of the SEK660 million impact was due to volume and under absorption. Inflationary pressures from raw materials and logistics also contributed, along with an unfavorable geographical mix, as Europe is more profitable than North America.
Q: Regarding Husqvarna-branded robotics, there was double-digit growth in Q1, but a small decline in Q2. Can you provide insights on sellout levels and inventory in trade? A: Glen Instone, CEO, noted that there was growth in Husqvarna-branded robotics in Q2, albeit not at Q1 levels. The sellout was reasonable, with the 300 series being well-received. Inventory levels are higher in Germany and the US, but normalized in other regions.
Q: The SEK300 million to SEK350 million headwind from Middle East inflation, is it related to raw materials and logistics? A: Terry Burke confirmed that the headwind is predominantly from raw materials and logistics, with roughly two-thirds attributed to raw materials and one-third to logistics.
Q: What is your strategy regarding pricing going forward, considering the challenges in increasing prices? A: Glen Instone stated that historically, annual price increases were implemented, but recent headwinds have led to more frequent adjustments. Price increases were implemented in June and July to counter raw material headwinds, while maintaining competitiveness.
Q: How is the profitability for Husqvarna Automower developing in H1, compared to last year? A: Glen Instone mentioned that profitability is slightly down due to price adjustments and cost pressures from new technology. However, it remains an EBIT margin accretive segment, with ongoing efforts to drive cost savings in raw materials.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
