Net sales for the Americas fell about 13 percent with effects from adjusted exchange rates resulting in a 7 percent decrease, the company reported in its year-end report. Sales prices were relatively stable during the year, the report stated.
"Demand recovered during the year and we strengthened our market positions for outdoor products in Europe and for construction," Magnus Yngen, Husqvarna president and CEO, said. "After several years of decline, demand recovered also in the U.S. For the group, full-year operating income and margin were significantly above last year's levels. Innovative new products and a strong focus on our dealer network were important contributors to the positive development."
Operating income in the Americas was negatively impacted by lower volumes and costs for distribution and information technology increased as well as costs for merchandising and marketing in an effort to grow sales to dealers.
Operating income was also impacted by the closure of Husqvarna's Beatrice, Neb., plant. The Beatrice facility had about 390 employees. The company consolidated its operations to Orangeburg.
In November, Husqvarna announced it would invest $105 million at its Old Elloree Road plant (Orangeburg) over the next decade and a half.
The first phase will involve a $30 million investment to be completed by Dec. 31, 2013, and the second phase will involve a $75 million investment to be completed by Dec. 31, 2024.
The total market demand in North America increased after four years of decline. Industry shipments increased for most product categories but chainsaws, the report said.
Reduced listing with a major retailer for 2010 had a negative effect on sales throughout the year. Efforts to grow sales in the dealer channel and with other retail accounts were successful but could not compensate for the reduced listings, the report said.
Americas sales in the fourth quarter decreased 5 percent.
In the meantime, sales in Europe and Asia increased by about 6 percent for the year while sales prices were stable during the year.
For 2010, Europe and Asia saw operating income and operating margin increase substantially. The increase was due to higher volumes.
Company-wide, there was a strengthened market share for park and garden products in Europe & Asia/Pacific and for construction products in North America.
There was a strong growth for dealer sales and overall operating income increased by 57 percent.
In the fourth quarter, net sales and operating income improved and operating margin improved to a negative 1.3 percent, up from a negative 10.9 percent margin. The growth for Europe & Asia/Pacific and construction offset lower sales for Americas and all operating income and operating margin improved for all business areas.
Yngen said due to the seasonality of the business, fourth-quarter results account for a relatively small share of annual sales and operating income and is mainly devoted to start-up production for the next season.
He said although market conditions are improving, retailers were still cautious to build inventory in the fourth quarter.
"We expect higher shipments to the trade in the first quarter of 2011, compared with the first quarter of 2010, due to improved listings and a continued focus on dealer sales," Yngen said. "We also expect a continued recovery of end-user demand for forest, park and garden products as well as for construction products."
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