Q2 2015 results presentation

2015-07-17

Summary, Q2 2015

• Continued trend of improved performance

– Operating income up 22% to SEK 1,675m (1,373)

– Operating margin improved 1.3 p.p. to 13.7%

• High margin divisions growing net sales

• Continued positive impact from Accelerated Improvement

Program and changes in exchange rates

- Product mix improvement driven by profit pool focus

and material cost reductions

• Further cost reductions in 2016-17 to release funds for

investments in profitable growth activities and to mitigate

unfavorable currency impact going forward

2

Financial highlights Q2 2015, Group

• Sales declined -1% (currency adjusted)– Higher in all divisions, except for Consumer Brands

• EBIT rose by 22% to SEK 1,675m (1,373)– AIP / profit pool focus drives mix improvements

– Favorable EBIT currency impact of approx. SEK 100m

• Operating margin improved 1.3 p.p. to 13.7%

3

SEKm

Q2

2015

Q2

2014

As

reported Adjusted1

Jan-Jun

2015

Jan-Jun

2014

As

reported Adjusted1 LTM2

FY

2014

Net sales 12,263 11,045 11 -1 23,191 20,730 12 -2 35,299 32,838

Gross margin, % 31.1 31.0 - - 29.3 28.9 - - 28.8 28.5

EBIT 1,675 1,373 22 12 2,787 2,281 22 10 2,087 1,581

Excl. impairment 1,675 1,373 22 12 2,787 2,281 22 10 2,854 2,348

EBIT margin, % 13.7 12.4 - - 12.0 11.0 - - 5.9 4.8

Excl. impairment, % 13.7 12.4 - - 12.0 11.0 - - 8.1 7.2

1 Adjusted for currency translation effects. 2 Last tw elve months rolling

% change, Q2 % change, H1

Husqvarna Division Q2 2015

• Sales increased 4% (currency adjusted)– Europe: product leadership areas robotic mowers and

handheld products showed good growth

– Asia/Pacific and Latin America: higher sales

– North America: lower sales in Q2, but higher over H1

• EBIT rose by 22% to SEK 1,001m (818)– Favorable sales volume impact

– Positive product mix development

• EBIT margin increased 1.3.pp to 17.5%

4

SEKm

Q2

2015

Q2

2014

As

reported Adjusted1

Jan-Jun

2015

Jan-Jun

2014

As

reported Adjusted1 LTM2

FY

2014

Net sales 5,727 5,038 14 4 11,069 9,396 18 6 17,122 15,449

EBIT 1,001 818 22 16 1,898 1,485 28 19 2,421 2,008

EBIT margin, % 17.5 16.2 - - 17.1 15.8 - - 14.1 13.0

1 Adjusted for currency translation effects. 2 Last tw elve months rolling

% change, Q2 % change, H1

Gardena Division Q2 2015

5

• Sales increased 3% (currency adjusted)– Expanded distribution: listings and customers

– Good development for robotic mowers

– Warm weather in June supported demand for

watering products

• EBIT in line with prior year Q2, which was a

strong quarter for watering

• Acquisition of Koubachi to strengthen future

product offering in Smart Garden, connecting

watering and gardening solutions

SEKm

Q2

2015

Q2

2014

As

reported Adjusted1

Jan-Jun

2015

Jan-Jun

2014

As

reported Adjusted1 LTM2

FY

2014

Net sales 1,795 1,712 5 3 3,114 2,864 9 5 4,462 4,212

EBIT 397 399 0 -3 601 576 4 0 408 383

EBIT margin, % 22.1 23.3 - - 19.3 20.1 - - 9.1 9.1

1 Adjusted for currency translation effects. 2 Last tw elve months rolling

% change, Q2 % change, H1

Now gardening is getting smarter

6

Building on experience and current trends

• Provide convenience, freedom and inspiration to passionate gardeners

• Gardena‘s history of successful system launches since 1968

• Dynamic development of Internet of Things applications

• Unique offering of both automatic watering and robotic lawn mowing

Koubachi to be integrated in Gardena Division

Switzerland-based pioneer and leader in smart garden space

Competence team will increase and accelerate value of Gardena‘s own smart gardening concept

Saving Time

Control Perfect Care

Introducing GARDENA smart system™ in 2016

Consumer Brands Division Q2 2015

7

• Sales declined -12% (currency adjusted)– Lower sales in North America and Europe

– Generally, value prioritized before volume

– Retailer inventory reductions

– Aggressive competitor promotions

• EBIT and margin increased– Continued AIP material cost reductions and

SG&A efficiency

– Lower absorption of fixed costs due to the lower volume

– Favorable currency impact

SEKm

Q2

2015

Q2

2014

As

reported Adjusted1

Jan-Jun

2015

Jan-Jun

2014

As

reported Adjusted1 LTM2

FY

2014

Net sales 3,643 3,410 7 -12 6,986 6,803 3 -17 10,021 9,838

EBIT 178 97 84 21 167 141 19 -28 -129 -155

EBIT margin, % 4.9 2.8 - - 2.4 2.1 - - -1.3 -1.6

1 Adjusted for currency translation effects. 2 Last tw elve months rolling

% change, Q2 % change, H1

Construction Division Q2 2015

8

• Sales increased 9% (currency adjusted)– Strong development in North America, which

rebounded after the external disturbances in Q1

– Higher sales in Europe

– Good growth in floor grinding

• EBIT and margin increased– Positive sales volume impact

– Sales, service and product development

investments on a higher level

– Favorable currency impact

SEKm

Q2

2015

Q2

2014

As

reported Adjusted1

Jan-Jun

2015

Jan-Jun

2014

As

reported Adjusted1 LTM2

FY

2014

Net sales 1,098 885 24 9 2,022 1,667 21 5 3,694 3,339

EBIT 160 117 37 18 234 198 18 2 390 354

EBIT margin, % 14.6 13.2 - - 11.6 11.9 - - 10.6 10.6

1 Adjusted for currency translation effects. 2 Last tw elve months rolling

% change, Q2 % change, H1

Consolidated income statement

9

SEKm

Q2

2015

Q2

2014

Jan-Jun

2015

Jan-Jun

2014

FY

2014

Net sales 12,263 11,045 23,191 20,730 32,838

Cost of goods sold -8,446 -7,620 -16,398 -14,748 -23,488

Gross income 3,817 3,425 6,793 5,982 9,350

Gross margin, % 31.1 31.0 29.3 28.9 28.5

Selling expense -1,718 -1,714 -3,185 -3,038 -5,626

Administrative expense -424 -351 -821 -676 -1,392

Other operating income/expense 0 13 0 13 16

Impairment of goodwill - - - - -767

Operating income1 1,675 1,373 2,787 2,281 1,581

Operating margin, % 13.7 12.4 12.0 11.0 4.8

Financial items, net -139 -110 -194 -206 -325

Income after financial items 1,536 1,263 2,593 2,075 1,256

Margin, % 12.5 11.4 11.2 10.0 3.8

Income tax -393 -296 -662 -488 -432

Income for the period 1,143 967 1,931 1,587 824

Basic earnings per share, SEK 1,99 1.68 3,36 2.76 1.43

Diluted earnings per share, SEK 1,98 1.68 3,35 2.76 1.43

1Of which depreciation, amortization

and impairment-277 -238 -538 -469 -1,734

26,8%

30,3%30,3%29,5%

27,0%

28,9%

27,7%27,8%

26,7%

28,7%

27,7%

25,2%25,2%

28,3%

26,3%

25,1%

26,4%

31,0%

29,0%

26,3%

27,2%

31,1%

20%

23%

26%

29%

32%

20%

25%

30%

35%

40%

Q1 2

01

0

Q2 2

01

0

Q3 2

01

0

Q4 2

01

0

Q1 2

01

1

Q2 2

01

1

Q3 2

01

1

Q4 2

01

1

Q1 2

01

2

Q2 2

01

2

Q3 2

01

2

Q4 2

01

2

Q1 2

01

3

Q2 2

01

3

Q3 2

01

3

Q4 2

01

3

Q1 2

01

4

Q2 2

01

4

Q3 2

01

4

Q4 2

01

4

Q1 2

01

5

Q2 2

01

5

LTMQuarter

Gross profit margin, % Q

Gross profit margin, % LTM

Gross margin development

10

Gross margin negatively

impacted by transaction

effects of approx.

1 p.p. Y-o-Y 2015

Consolidated balance sheet

11

SEKm

30 Jun

2015

30 Jun

2014

31 Dec

2014

Non-current assets 15,867 15,094 15,748

Inventories 7,874 6,704 7,709

Trade receivables 6,688 6,457 2,898

Other current assets 591 716 716

Liquid funds 2,248 2,330 2,105

Total assets 33,268 31,301 29,176

Total equity 12,961 12,497 12,088

Interest-bearing liabilities incl. dividend payable 8,638 8,525 7,504

Pension liabilities 1,756 1,408 1,835

Provisions 2,816 2,412 2,550

Trade payables 4,103 3,686 3,154

Other current liabilities 2,994 2,773 2,045

Total equity and liabilities 33,268 31,301 29,176

Operating cash flow

12

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

Q1 Q2 Q3 Q4

SEKm

2015

2014

2013

0.00

0.30

0.60

0.90

1.20

1.50

1.80

2.10

2.40

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

201

0 Q

3

201

0 Q

4

201

1 Q

1

201

1 Q

2

201

1 Q

3

201

1 Q

4

201

2 Q

1

201

2 Q

2

201

2 Q

3

201

2 Q

4

201

3 Q

1

201

3 Q

2

201

3 Q

3

201

3 Q

4

201

4 Q

1

201

4 Q

2

201

4 Q

3

201

4 Q

4

201

5 Q

1

201

5 Q

2

Net Debt / EquitySEKm

Net debt

Equity

Net debt / equity

Net debt and equity

13

Key figures

14

Q2

2015

Q2

2014

Jan-Jun

2015

Jan-Jun

2014

Full-year

2014

Net sales, SEKm 12,263 11,045 23,191 20,730 32,838

Gross margin, % 31.1 31.0 29.3 28.9 28.5

Operating income, SEKm 1,675 1,373 2,787 2,281 1,581

Excl. items affecting comparability 1,675 1,373 2,787 2,281 2,348

Operating margin, % 13.7 12.4 12.0 11.0 4.8

Excl. items affecting comparability 13.7 12.4 12.0 11.0 7.2

Working capital, SEKm - - 6,716 6,276 5,066

Return on capital employed, % - - 9.6 10.5 7.6

Return on equity, % - - 9.2 11.6 6.7

Earnings per share after dilution, SEK 1.98 1.68 3.35 2.76 1.43

Capital turn-over rate, times - - 1.7 1.7 1.7

Operating cash flow, SEKm 2,220 2,282 -190 322 1,425

Net debt/equity ratio - - 0.63 0.61 0.60

Capital expenditure, SEKm 365 296 608 588 1,386

Average number of employees 15,295 16,128 14,693 15,714 14,337

Summary, Q2 2015

• Continued trend of improved performance

– Operating income up 22% to SEK 1,675m (1,373)

– Operating margin improved 1.3 p.p. to 13.7%

• High margin divisions growing net sales

• Continued positive impact from Accelerated Improvement

Program and changes in exchange rates

- Product mix improvement driven by profit pool focus

and material cost reductions

• Further cost reductions in 2016-17 to release funds for

investments in profitable growth activities and to mitigate

unfavorable currency impact going forward

15

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