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Research Tree provides access to ongoing research coverage, media content and regulatory news on HUSQVARNA AB-B SHS. We currently have 6 research reports from 1 professional analysts.
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HUSQVARNA AB-B SHS
HUSQVARNA AB-B SHS
Higher operating margin despite Gardena
21 Oct 16
Husqvarna had a slightly disappointing Q3 16 below our expectations. This is tempered by the challenging basis of comparison last year at Gardena and the Construction business to a lesser extent. Q3 16 figures: Sales reached SEK7,349m (+1%). Organic sales were down 1% (vs flat on Q3 15) due to Gardena, -6% (vs +19% in Q3 15) and the Consumer Brands division, -10% (vs -18% in Q3 15). Conversely, Husqvarna performed well, +5% (vs +3% in Q3 15) and the Construction division grew slowly, +1% (vs +7% in Q3 15). The operating income increased to SEK431m, +6% and +2% at constant currency, and the operating margin improved to 5.9% of sales (+0.4pt). The currency effects were negative by SEK-60m (vs SEK-60m in Q3 15). The increase in group operating income was attributable to the Husqvarna division (SEK368m, +14%), the Construction division (SEK155m, +8%) and the Consumer Brands division which reduced its operating losses (SEK-80m vs SEK-119m in Q3 15). Conversely, the Gardena division had lower operating income, or SEK50m (vs SEK113m in Q3 15), due to the lower sales of the highly-profitable watering products. Group net profit was SEK206m (+5%) after a surge in net financial costs (+49% to SEK-124m including a negative currency effect) and a lower income tax rate (33.2%, -5.9pts) considering that there was a one-off tax item in Q3 15. On 9m 2016, the operating cash flow increased to SEK3.1bn (+22%) after a decrease in the change of WCR. FCF reached SEK2.1bn after net capex of SEK996m (+5%). On 30 September 2016, financial net debt (excluding the provision for pensions) was reduced to SEK3.8bn (-12%) and represented 27% of total equity (vs 32% on 30 September 2015).
Good operating performance despite lower sales
15 Jul 16
Q2 16 figures Sales reached SEK11,504m (-6%). Organic sales were down 4% due to the drop of the organic activity in the Consumer brands division (-24%). Conversely, the other divisions showed positive organic sales growth, respectively +3% for Husqvarna, an impressive +13% for Gardena, +4% for the Construction business. The gross margin surged to 34.2% of sales (+3.2pts), reflecting stable prices, a favourable product mix, lower material costs and efficiency improvements. The group’s operating income increased to SEK1,729m (+3% and +5% excluding the negative currency effect), representing an operating margin of 15% of sales (+1.3pts). This included a negative currency impact of SEK-170m split as follows: SEK-100m in the Husqvarna division, SEK-30m in the Gardena division, SEK-65m in the Consumer brands division, and SEK+25m in the Construction division. The improvement in the operating result was mainly attributable to the Gardena division, SEK449m (+13% and +14% at constant currency) and the Husqvarna division, SEK1,031m (+3% and +4% at constant currency) which more than offset the lower contribution of the Consumer brands division, SEK147m (-17% and -12% at constant currency). In the Construction division, the increase in the operating income, SEK179m (+12% and +15% at constant currency) was due to the positive currency effect principally. Group net profit was SEK1,255m (+10%) after lower net financial charges (SEK-72m vs SEK-139m in Q1 15) mainly due to currency effects, and a lower income tax rate (-1.6pts to 24%). Key items in H1 16 Sales reached SEK22.9bn (-1% and +1% organically), the operating income improved to SEK2,895m (+4% and +5% organically) taking into account a negative currency impact of SEK-380m (vs a positive impact of SEK200m in H1 15) and the group net profit was SEK2,014m (+5%). The cash flow from operations increased to SEK1,339m (vs SEK734m in H1 15) thanks to lower inventories reflecting the lower demand in North America and a decrease in the change of trade receivables. Capital expenditure increased to SEK632m (+4%). Free cash flow surged to SEK707m (vs SEK126m in H1 15). Finally, the financial net debt reached SEK5bn (vs SEK5.8bn in H1 15) and represented 36% of shareholders’ equity.
Negative currency effects offset at Group level
22 Apr 16
Q1 16 earnings Sales reached SEK11,361m (+4%). Excluding currency effects, sales increased by 5% (vs -3% in Q1 15) thanks to organic growth in all divisions (Husqvarna: +4%, Gardena: +17%, Consumer Brands: +2%, Construction: +6%). The gross margin improved to 27.8% of sales (+0.6pts). The operating income was SEK1,166m (+5%, +6% excluding currency effects) and corresponded to a margin rate of 10.3% of sales (+0.1pt) despite hugely negative currency effects as expected (SEK-215m vs SEK+107m in Q1 15). The increase in operating income was attributable to the Gardena division (SEK226m, +11%, margin rate of 14.9% of sales, -0.6pt), the Consumer Brands division (SEK64m vs SEK-11m in Q1 15, margin rate of 1.9% of sales, +2.2pts) and the Construction division (SEK89m, +20%, margin rate of 9.2% of sales, +1.2pt). The Husqvarna division was the only division to report lower operating income (SEK844m, -6%, margin rate of 15.5%, -1.3pt) and was the most affected by the negative currency effects (SEK-135m). The Group net profit was SEK759m (-3%) after higher net financial expenses (SEK-142m vs SEK-55m in Q1 15) and a fairly similar income tax rate (25.7%, +0.2pt). Husqvarna traditionally has negative operating cash flow in Q1 due to inventory build-up. The negative operating cash flow was reduced to SEK-1,426m (vs -2,167m in Q1 15) due to a lower increase in the change of inventories. Capital expenditure increased to SEK311m (+28%). Finally, the financial net debt reached SEK6.7bn (vs SEK8.2bn in Q1 15) and represented 49% of shareholders’ equity.
Satisfactory Q4 15, challenging Q1 16 in perspective
08 Feb 16
+Q4 15 figures+ Sales reached SEK5,672m (+7%, +2% organically). Organic sales growth was driven by all divisions (Husqvarna, Gardena, Construction: all +6%) except for the Consumer Brands division (-10%). The operating loss was SEK365m (vs SEK-1,032m including a goodwill impairment loss of SEK767m in Q4 14). It included additional restructuring charges of SEK153m and a negative currency impact of SEK45m. Excluding the restructuring costs, the operating loss was reduced to SEK212m (vs SEK-265m restated in Q4 14). The Husqvarna and Construction divisions had a positive contribution (respectively SEK65m and SEK87m) while the Gardena and Consumer Brands divisions were loss-making but had opposite trends (Gardena: SEK-123m vs SEK-186m in Q4 14, Consumer Brands: SEK-168m vs SEK-158m in Q4 14). Group net loss was SEK238m (vs SEK-961m) after higher net financial expenses (SEK-67m vs SEK-49m in Q4 14) and income tax of SEK193m. +FY2015 figures+ Husqvarna posted sales of SEK36,170m (+10%, -1% organically). The decline in organic sales was attributable to the Consumer Brands division (-16%) while the Husqvarna, Gardena and Construction divisions performed very well (respectively +6%, +8% and +6%). The reported operating income surged by 79% to SEK2,827m. Restated from the restructuring charges (SEK153m in 2015) and non-recurring items (impairment loss of SEK767m in 2014), operating income increased by 27% to SEK2,980m and included a positive currency impact of SEK110m (o/w SEK200m in H1 15 and SEK-90m in H2 15). Group net profit was SEK1,883m (vs SEK820m in 2014) after net financial expenses of SEK-344m (+6%) and lower income tax rate (24% vs 34% in 2014 due to the impairment loss which was non-deductible). In 2015, operating cash flow increased to SEK3.0bn (+9%) and FCF pre-dividend increased to SEK1,731m (+24%) taking into account lower net capex of SEK1,325m (-6%). The dividend paid to shareholders amounted to SEK945m. At year-end 2015, the financial net debt was reduced to SEK4,980m (-8%).
Exceptional performance at Gardena
21 Oct 15
Husqvarna had quite a good Q3 15, characterised by an exceptional performance of the Gardena division, the continuing weakness of the Consumer Brands division and adverse currency effects at the group operating level. Q3 15 results: Sales reached SEK7.3bn (+8%, flat organically compared to +3% last year). Organic sales grew for Husqvarna (+3%), Gardena (+19%) and the Construction activity (+7%). The Consumer Brands division was the only one to have lower organic sales (-18%). The operating income increased to SEK405m (+22%) and the margin rate improved to 5.5% of sales (+0.6pt). This improvement was attributable to the Gardena division (SEK113m vs SEK-7m restated in Q3 14) and the construction business (SEK144m, +35%), both having benefited from higher volume and a favourable product-mix. The operating loss was slightly reduced in the Consumer Brands division (SEK-119m vs SEK-138m restated in Q3 14) while the Husqvarna division was the only one to have a lower contribution (SEK321m, -26%) due to lower production volumes and an unfavourable product-mix (earlier selling of winter products such as snow-blowers). As expected, the currency effects turned negative at the operating level (SEK-60m). Group net profit was SEK197m (-1%) after an increase in the net financial costs (+19% to SEK-83m) due to a higher average interest rate on borrowings (3.9% vs 3.5%) and a surge in the income tax rate (c.39% vs 24% in Q3 14) due to higher income in countries with higher tax rates and a one-time tax item. On 30 September 2015, the financial net debt (excluding the provisions for pensions) amounted to SEK4.3bn (-12%) and represented 32% of total equity (vs 38% on 30 September 2014). The operating cash flow declined to SEK2.3bn (-10%) due to an increase in the change of trade receivables. It was used to fund significant capex (SEK947m, +5%). The cash out-flows do not include the second part of the dividend that will be paid on 28 October 2015 (SEK1.10/share following SEK0.55/share paid in April 2015).
A challenge in front of Husqvarna in the short-term
17 Jul 15
Q2 15 earnings: Sales surged to SEK12.3bn (+11%) due to a significant currency effect. Organic sales were down 1% due to the drop of organic sales in the Consumer brands division (-12%). Conversely, the Husqvarna and Gardena brands performed well with organic sales up +4% and +3% respectively, and the Construction business also posted strong organic sales growth (+9%). The gross margin increased to 31.1% of sales (+0.1pt). The group has been in a positive quarterly trend yoy from the beginning of 2014 until now. The group's operating income increased to SEK1,675m (+22%), representing an operating margin of 13.7% of sales (+1.3pts). This included a positive currency impact of SEK100m split as follows: SEK20m in the Husqvarna division, SEK50m in the Consumer brands division, SEK30m in the Construction division. The improvement in the operating result was attributable to the Husqvarna division, SEK1,001m (+22%), the Construction division, SEK160m (+37%), and the Consumer brands division, SEK178m (vs SEK97m in Q2 14), despite lower volume and thanks to the reduction of direct material costs and selling and administrative expenses. Group net profit was SEK1,138m (+18%) after higher net financial charges (SEK-139m vs SEK-110m in Q2 14) and a higher income tax rate (+2.2pts to 25.6%). Key items in H1 15: Sales reached SEK23.2bn (+12% and -2% organically), the operating income improved to SEK2,787m (+22%) taking into account a positive currency impact of SEK200m and group net profit was SEK1,924m (+22%). The operating cash flow fell to SEK418m (-54%) due to an increase in the change of trade receivables and the fact that there was no change of inventories, unlike H1 14 where there was a reduction. Capital expenditure increased to SEK608m (+3%). Finally, the financial net debt reached SEK5.8bn (vs SEK6.2bn in H1 14) and represented 44% of shareholders' equity.
Panmure Morning Note 01-12-16
01 Dec 16
Consistent with the FY16 trading update/pre-close on September 14, today’s FY16 results are in line with our and consensus underlying PBT expectations of £12.5m (+22.5% YoY). The total FY16 dividend is up 36%, covered 3.4x, whilst net cash is £6.9m (+53%). FY16 represented another good year of execution, and FY17 has started well. The company's business mix is now more diverse across geographies (International accounted for 26% of total sales vs 21% in FY15) and we see CCT’s increasing diversity in retail distribution as both a further risk-mitigation and opportunity driver. We make no changes to our FY17 and FY18 PBT forecasts of £13.5m and £14.5m (albeit, we make some changes to the constituent parts) and introduce a FY19 PBT of £15.5m. We maintain our BUY and TP of 635p.
Strong H2 expected
30 Nov 16
H1 results were in line with expectations with PBT of £9.0m, EPS of 9.9p and DPS of 7.2p. The NAV / share is 253p. We expect the company to have a strong H2 based on its forward sales position and the timing of developments coming through. Telford has a strong balance sheet, a large development pipeline and impressive forward sales position, as well as good levels of demand for its product and geography from a diverse group of buyers. No change to forecasts at this stage.
US$500m to be invested in start-ups by 2026
28 Nov 16
BMW started a venture capital fund in 2011 with an initial investment of $100m. This is now to be expanded to $500m within the next ten years. The fund, called ‘BMW i Ventures’, has been moved from NYC to Mountain View, CA, to have closer access to the technology developed in the Silicon Valley. The investment focus will be on Enabling Technology and Digital Vehicle Technology, Mobility and Digital Services, Customer Experience, and Advanced Production Technology. According to BMW, the fund has closed 15 deals in ‘mobility-related’ technologies so far. It typically acquires a minority stake in start-ups which allows it to gain access to external innovations (so-called ‘outside-in’) that secure the company’s role as a technology pioneer. Simultaneously, it provides support for start-ups by offering internal resources (so-called ‘inside-out’) such as technical expertise and access to its own network of an established car producer.
N+1 Singer - Morning Song 29-11-2016
29 Nov 16
Vp has reported another impressive set of interims, confirming strong growth in most markets and a positive outlook. Recent acquisitions are bedding in well and the full year outturn is set to exceed previous expectations (5%/6% EPS upgrades in FY17/FY18). The recent Capital Markets Day provided a reminder of Vp’s qualities (specialist focus, high returns, strong cash generation) and its growth potential, which in our view are not reflected in a modest <11x P/E rating. We firmly believe the shares are due a re-rating and see intrinsic value in excess of 800p.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Small Cap Breakfast
29 Nov 16
Asia Pacific Investment Partner - the research-driven emerging and frontier markets real estate development business intends to float on AIM and conduct a placing in December RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.