Stockholm
April 26, 2012
HANS
LINNARSON, PRESIDENT AND CEO:
“Husqvarna
Group delivered a first quarter with higher sales and operating income for all
three business areas. We have many new products reaching the market this year,
including additional robotic mowers, upgraded riders and a new range of premium
consumer products under the McCulloch brand, that have been received well by
the trade. Together with operational improvements in our supply chain, we
capitalized on increased demand.
The
market in the U.S. was favorable, with increased consumer spending on lawn and
garden equipment. The overall U.S. economic environment developed positively
and the market for outdoor products was also fueled by an early and warm
spring. Improved factory delivery performance helped the Group to a strong
sales development in the first quarter, with market share gains in several
areas.
In
Europe, the Group’s development was stable, which was in line with the market
trend. Demand in southern Europe and
France was weaker than last year, while demand in Germany and northern Europe
had a positive development. The operating margin for Europe and Asia/Pacific remained
on the same high level, compared to the previous year’s strong first quarter.
For
Construction, the positive development continued. Sales, operating income and
margin improved, also primarily driven by a strong U.S. development.
In
the US market, the near term outlook is for the stronger demand year-on-year to
continue, while the demand outlook for the European market is more difficult to
assess.
Customer
service and delivery reliability are some of the Group’s top priorities for
2012, and I am pleased to note that so far into the season, we have improved in
both. However, further efficiency improvements are needed.”
· **
Net
sales increased by 12% to SEK 9,811m (8,774). Adjusted for exchange rate
effects, net sales
increased by 9%.
· **
Strong
sales performance and market share gains for Americas and Construction, stable
development
for Europe &
Asia/Pacific.
· **
Operating
income increased to SEK 915m (662).
· **
Higher
operating income for Americas and Construction,
stable for Europe
& Asia/Pacific.
· **
Operating
cash flow improved to SEK -2,443m (-2,809).
· **
Earnings
per share increased to SEK 1.10 (0.84).
FIRST
QUARTER
NET
SALES
Net
sales for the first quarter increased by 12% to SEK 9,811m (8,774). Adjusted
for exchange rate effects, net sales for the Group increased by 9%, for Europe
& Asia/Pacific by 1%, for Americas by 19% and for Construction by 11%.
OPERATING
INCOME
Operating
income for the first quarter increased by 38% and amounted to SEK 915m (662)
and the corresponding operating margin rose to 9.3% (7.5). Operating income
increased in all business areas.
Operating
income was positively affected mainly by higher sales, lower production costs
and changes in exchange rates.
Changes
in exchange rates had a total positive effect on operating income of
approximately SEK 67m, compared with the first quarter 2011, of which
transaction effects amounted to SEK -3m (20), translation effects amounted to
SEK 0m (-2) and change in value of currency hedging contracts amounted to SEK
25m (-63).
In
the first quarter 2011, operating income was negatively impacted by SEK -150m
referring to costs directly related to production disturbances and SEK -40m
referring to restructuring charges.
FINANCIAL
ITEMS NET
Net
financial items for the first quarter amounted to SEK -121m (-73). The average
interest rate on borrowings at the end of the quarter was 3.9% (4.0). Net
financial items were negatively impacted mainly by higher net debt and negative
mark-to-market valuation on the interest rate component of the Group’s hedge
contracts
INCOME
AFTER FINANCIAL ITEMS
Income
after financial items amounted to SEK 794m (589) corresponding to a margin of
8.1% (6.7).
TAXES
Taxes
amounted to SEK -162m (-105), corresponding to a tax rate of 20% (18) of income
after financial items.
EARNINGS
PER SHARE
Income
for the quarter amounted to SEK 632m (484), corresponding to SEK 1.10 (0.84)
per share.
OPERATING
CASH FLOW
Due
to the seasonality of the Group’s operations, operating cash flow is normally
negative in the first quarter.
Operating
cash flow for the first quarter amounted to SEK -2,443m (-2,809). The improved
operating cash flow was mainly due to higher income after financial items,
lower inventory build-up and lower investments compared to the corresponding
quarter 2011.
FINANCIAL
POSITION
Group
equity as of March 31, 2012, excluding non-controlling interests, amounted to
SEK 11,700m (12,022), corresponding to SEK 20,4 (21.1) per share. Group equity
was charged with dividend to shareholders in March
2012,
compared with 2011 when equity was charged with dividend in April.
Net
debt as of March 31 amounted to SEK 9,400m (8,305) of which liquid funds
amounted to SEK 1,434m (1,985) and interest bearing debt amounted to SEK
10,834m (10,289). The higher net debt was mainly a result of an increase in
working capital. The major currencies used for debt financing are SEK and USD.
In the first quarter, net debt increased by SEK 140m as a result of changes in
exchange rates.
The
net debt/equity ratio amounted to 0.80 (0.69) and the equity/assets ratio to
35.0% (37.5).
On
March 31, 2012, long-term loans including financial leases amounted to SEK
6,883m (5,942) and short term loans including financial leases to SEK 3,708m
(3,794). Long-term loans consist of SEK 3,158m (3,135) in issued bonds, and
bank loans of SEK 3,725m (2,807). The issued bonds and the bank loans mature in
2012
PERFORMANCE
BY BUSINESS AREA
EUROPE
& ASIA/PACIFIC
Net
sales for Europe & Asia/Pacific in the first quarter increased by 2%.
Adjusted for exchange rate effects, net sales increased by 1%, compared to a
strong first quarter of 2011.
Sales
increased in major markets such as Germany, Austria and the Nordic region,
while sales in France and southern Europe showed declines. The development for
the Asia/Pacific region was in line with the previous year, although Australia
had a weather driven decline.
New
products, including robotic mowers, upgraded riders and a new range of premium
consumer products under the McCulloch brand, performed well. Sales to the dealer
channel grew as a percentage of the business area’s total sales.
Operating
income amounted to SEK 833m (815) and the operating margin remained at a high
level, 17.9% (17.9). Changes in exchange rates had a positive year-on-year
effect on operating income of SEK 72m.
AMERICAS
Net
sales for Americas in the first quarter increased by 23%. Adjusted for exchange rate effects, net sales increased
by 19%, which is estimated to be higher than the development for the total
market.
Sales
growth in the U.S. market was high. Latin America had a modest increase, partly
due to a slowdown in the economy in Brazil. Sales in the U.S. were driven by an
early and warm spring, improvement in the overall economy as well as better
production output. In terms of products, ride-on and walk-behind mowers had the
best development. The Group’s market shares increased in several areas.
However, further efficiency improvements are needed.
Operating
income for the first quarter amounted to SEK 81m (-94) and the corresponding
operating margin was 1.8% (-2.6). Operating income was positively affected by
the higher sales volumes, lower production costs and mix. Changes in exchange
rates had a positive year-on-year effect on operating income of SEK 3m. In the
first quarter 2011, operating income was negatively impacted by SEK -132m
referring to costs directly related
to production disturbances.
CONSTRUCTION
Net
sales for Construction in the first quarter increased by 14%. Adjusted for exchange
rate effects, net sales increased by 11%.
Total
market demand increased in the U.S., as a result of increased construction
activity and a continued product replacement need. Market conditions in Europe
were mixed. Demand declined in southern Europe while the development in
northern Europe was slightly positive. In the rest of the world, demand
continued to grow.
Sales
in the U.S. market developed positively in all product categories, and market
shares are estimated to have increased.
Operating
income for the first quarter increased to SEK 39m (-17) and the operating
margin improved to 5.3 percent (-2.6), mainly as a result of higher sales
volumes and restructuring charges of SEK -40m that were charged to operating
income in Q1 2011.
PARENT
COMPANY
Net
sales in the first quarter 2012 for the Parent Company, Husqvarna AB, amounted
to SEK 3,442m (3,141), of which SEK 2,836m (2,545) referred to sales to Group
companies and SEK 606m (596) to external customers.
Income
after financial items amounted to SEK 278m (152). Income for the period was SEK
222m (117). Investments in tangible and intangible assets amounted to SEK 83m (83).
Cash and cash equivalents amounted to SEK 87m (285) as of March 31, 2012.
Undistributed earnings in the Parent Company amounted to SEK 16,738m (17,626),
after deduction of approved dividend amounting to SEK 859m.
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