Release Date: February 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Husqvarna AB (HSQVY, Financial) delivered a solid cash flow for the fourth quarter, generating close to SEK7 billion, primarily due to inventory reductions.
- The company achieved strong growth in professional robotic mowers and battery-powered products, with double-digit growth in these segments.
- Husqvarna AB (HSQVY) successfully implemented cost-saving programs, realizing SEK1.1 billion in savings from previously announced initiatives.
- The company announced a strategic partnership with Flex, enhancing competitiveness in the North American market and improving profitability and capital efficiency.
- Husqvarna AB (HSQVY) exceeded its Sustainovate 2025 carbon reduction target, achieving a 56% reduction in CO2 emissions, surpassing the target of 35%.
Negative Points
- Net sales declined by 3% organically in the fourth quarter, impacted by challenging market conditions and cautious behavior from dealers and retailers.
- The company's operating income was negatively affected by lower capacity utilization, promotional campaigns, and an unfavorable product mix, resulting in a negative EBIT of close to SEK700 million.
- The Gardena division experienced an 8% decline in organic sales and a negative operating margin of 30.7%, largely due to higher inventory levels and cautious retailers.
- The Construction division saw a 9% decline in organic sales in the fourth quarter, with weak demand in North America offsetting positive sales growth in Europe.
- Despite cost-saving efforts, the company's overall results and margins were down for the year, primarily due to lower volumes and an unfavorable product mix.
Q & A Highlights
Q: Can you elaborate on the strategic decision to exit the Orangeburg facility and its financial implications?
A: Terry Burke, CFO, explained that the decision to divest the Orangeburg facility to Flex was an internal strategic move to become more asset-light and manage working capital efficiently. Initially, there will be a small negative impact on operational costs due to transition and integration costs, but it is expected to result in cost savings and improved competitiveness in the US market in the long term.
Q: How are discussions with suppliers regarding cost reductions progressing, and what impact might this have on gross margins in 2025?
A: Pavel Hajman, CEO, stated that Husqvarna is actively pursuing cost efficiency programs, including cost reductions in supply and raw materials. While specific details were not disclosed, the company aims to be successful in these efforts, which have already shown partial success this year.
Q: With the rollout of boundary wire-free robotic products, what are the expected pricing trends for legacy categories in 2025?
A: Pavel Hajman noted that while there is competition in the market, Husqvarna's products are positioned as premium offerings with strong brand trust and service networks. The company expects some price reductions in boundary-wire products but is not actively driving these price decreases.
Q: What is the outlook for inventory levels and capacity utilization in 2025?
A: Terry Burke mentioned that while a significant inventory reduction like the SEK3 billion seen in 2024 is not expected, the company aims to manage working capital efficiently. Inventory levels will be further reduced, and better capacity utilization is anticipated compared to the previous year.
Q: How is the competitive landscape in the robotics segment, and what are the growth prospects for different segments?
A: Pavel Hajman highlighted that Husqvarna holds a strong position in both the Professional and High-end Consumer segments, with double-digit growth expected in the Robotics segment. The company aims to regain market share in the Residential segment with new boundary wire-free models.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
